[House Document 104-160]
[From the U.S. Government Publishing Office]
104th Congress, 2d Session - - - - - - - - House Document 104-
160, Pt. 2
DEFICIT REDUCTION AND BALANCED BUDGET BY FISCAL YEAR 2002
----------
MESSAGE
from
THE PRESIDENT OF THE UNITED STATES
transmitting
PROPOSED LEGISLATION FOR DEFICIT REDUCTION AND TO ACHIEVE A BALANCED
BUDGET BY FISCAL YEAR 2002
January 9 (legislative day, January 5), 1996.--Message and accompanying
papers referred to the Union Calendar and ordered to be printed
104th Congress, 2d Session - - - - - - - - House Document 104-
160, Pt. 2
DEFICIT REDUCTION AND
BALANCED BUDGET BY FISCAL YEAR 2002
__________
MESSAGE
from
THE PRESIDENT OF THE UNITED STATES
transmitting
PROPOSED LEGISLATION FOR DEFICIT REDUCTION AND TO ACHIEVE A BALANCED
BUDGET BY FISCAL YEAR 2002
January 9 (legislative day, January 5), 1996.--Message and accompanying
papers referred to the Union Calendar and ordered to be printed
DEFICIT REDUCTION AND BALANCED BUDGET
To the Congress of the United States:
I hereby submit to the Congress a plan to achieve a
balanced budget not later than the fiscal year 2002 as
certified by the Congressional Budget Office on January 6,
1996. This plan has been prepared by Senator Daschle and if
passed in its current form by the Congress, I would sign it
into law.
William J. Clinton.
The White House, January 6, 1996.
A BILL To provide for deficit reduction and achieve a balanced budget
by fiscal year 2002
Be it enacted in the Senate and the House of
Representatives of the United States of America in Congress
assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Balanced Budget Act of 1995
for Economic Growth and Fairness''.
SEC. 2. TABLE OF CONTENTS.
This Act is organized into titles as follows:
Title I--Banking, Housing, and Related Provisions
Title II--Spectrum Allocation Provisions
Title III--Medicaid
Title IV--Medicare
Title V--Welfare Reform
Title VI--Federal Retirement Provisions
Title VII--Veterans Provisions
Title VIII--Asset Sales, User Fees, and other Mandatory Provisions
Title IX--Revenues
Title X--Budget Enforcement
TITLE I--BANKING, HOUSING, AND RELATED PROVISIONS
Subtitle A--Financial Institutions
SEC. 2011. SPECIAL ASSESSMENT TO CAPITALIZE SAIF.
(a) In General.--Except as provided in subsection (f), the
Board of Directors shall impose a special assessment on the
SAIF-assessable deposits of each insured depository at a rate
applicable to all such institutions that the Board of
Directors, in its `sole discretion, determines (after taking
into account the adjustments described in subsections (g)
through (j)) will cause the Savings Association Insurance Fund
to achieve the designated reserve ratio on the first business
day of January 1996.
(b) Factors To Be Considered.--In carrying out subsection
(a), the Board of Directors shall base its determination on--
(1) the monthly Savings Association Insurance Fund
balance most recently calculated;
(2) data on insured deposits reported in the most
recent reports of condition filed not later than 70
days before the date of enactment of this Act by
insured depository institutions; and
(3) any other factors that the Board of Directors
deems appropriate.
(c) Date of Determination.--For purposes of subsection (a),
the amount of the SAIF-assessable deposits of an insured
depository institution shall be determined as of March 31,
1995.
(d) Date Payment Due.--The special assessment imposed under
this section shall be--
(1) due on the first business day of January 1996;
and
(2) paid to the Corporation on the later of--
(A) the first business day of January 1996;
or
(B) such other date as the Corporation shall
prescribe, but not later than 60 days after the
date of enactment of this Act.
(e) Assessment Deposited in SAIF.--Notwithstanding any
other provisions of law, the proceeds of the special assessment
imposed under this section shall be deposited in the Savings
Association Insurance Fund.
(f) Exemptions for Certain Institutions.--
(1) Exemption for weak institutions.--The Board of
Directors may, by order, in its sole discretion, exempt
any insured depository institution that the Board of
Directors determines to be weak, from paying the
special assessment imposed under this section if the
Board of Directors determines that the exemption would
reduce risk to the Savings Association Insurance Fund.
(2) Guidelines required.--Not later than 30 days
after the date of enactment of this Act, the Board of
Directors shall prescribe guidelines setting forth the
criteria that the Board of Directors will use in
exempting institutions under paragraph (1). Such
guidelines shall be published in the Federal Register.
(3) Exemption for certain newly chartered and other
defined institutions.--
(A) In general.--In addition to the
institutions exempted from paying the special
assessment under paragraph (1), the Board of
Directors shall exempt any insured depository
institution from payment of the special
assessment if the institution--
(i) was in existence on October 1,
1995, and held no SAIF-assessable
deposits prior to January 1, 1993;
(ii) is a Federal savings bank
which--
(I) was established de novo
in April 1994 in order to
acquire the deposits of a
savings association which was
in default or in danger of
default; and
(II) received minority
interim capital assistance from
the Resolution Trust
Corporation under section
21A(w) of the Federal Home Loan
Bank Act in connection with the
acquisition of any such savings
association; or
(iii) is a savings association, the
deposits of which are insured by the
Savings Association Insurance Fund,
which--
(I) prior to January 1, 1987,
was chartered as a Federal
savings bank insured by the
Federal Savings and Loan
Insurance Corporation for the
purpose of acquiring all or
substantially all of the assets
and assuming all or
substantially all of the
deposit liabilities of a
national bank in a transaction
consummated after July 1, 1986;
and
(II) as of the date of that
transaction, had assets of less
than $150,000,000.
(B) Definition.--For purposes of this
paragraph, an institution shall be deemed to
have held SAIF-assessable deposits prior to
January 1, 1993, if--
(i) it directly held SAIF-assessable
insured deposits prior to that date; or
(ii) it succeeded to, acquired,
purchased, or otherwise holds any SAIF-
assessable deposits as of the date of
enactment of this Act that were SAIF-
assessable deposits prior to January 1,
1993.
(4) Exempt institutions required to pay assessments
at former rates.--
(A) Payments to saif and dif.--Any insured
depository institution that the Board of
Directors exempts under this subsection from
paying the special assessment imposed under
this section shall pay semiannual assessments--
(i) during calendar years 1996 and
1997, into the Savings Association
Insurance Fund, based on SAIF-
assessable deposits of that
institution, at assessment rates
calculated under the schedule in effect
for Savings Association Insurance Fund
members on June 30, 1995; and
(ii) during calendar years 1998 and
1999--
(I) into the Deposit
Insurance Fund, based on SAIF-
assessable deposits of that
institution as of December 31,
1997, at assessment rates
calculated under the schedule
in effect for Savings
Association Insurance Fund
members on June 30, 1995; or
(II) in accordance with
clause (i), if the Bank
Insurance Fund and the Savings
Association Insurance Fund are
not merged into the Deposit
Insurance Fund.
(B) Optional pro rata payment of special
assessment.--This paragraph shall not apply
with respect to any insured depository
institution (or successor insured depository
institution) that has paid, during any calendar
year from 1997 through 1999, upon such terms as
the Corporation may announce, an amount equal
to the product of--
(i) 12.5 percent of the special
assessment that the institution would
have been required to pay under
subsection (a), if the Board of
Directors had not exempted the
institution; and
(ii) the number of full semiannual
periods remaining between the date of
the payment and December 31, 1999.
(g) Special Election for Certain Institutions Facing
Hardship as a Result of the Special Assessment.--
(1) Election authorized.--If--
(A) an insured depository institution, or any
depository institution holding company which,
directly or indirectly, controls such
institution, is subject to terms or covenants
in any debt obligation or preferred stock
outstanding on September 13, 1995; and
(B) the payment of the special assessment
under subsection (a) would pose a significant
risk of causing such depository institution or
holding company to default or violate any such
term or covenant,
the depository institution may elect, with the approval
of the Corporation, to pay such special assessment in
accordance with paragraphs (2) and (3) in lieu of
paying such assessment in the manner required under
subsection (a).
(2) 1st assessment.--An insured depository
institution which makes an election under paragraph (1)
shall pay an assessment of 50 percent of the amount of
the special assessment that would otherwise apply under
subsection (a), by the date on which such special
assessment is otherwise due under subsection (d).
(3) 2d assessment.--An insured depository institution
which makes an election under paragraph (1) shall pay a
2d assessment, by the date established by the Board of
Directors in accordance with paragraph (4), in an
amount equal to the product of 51 percent of the rate
determined by the Board of Directors under subsection
(a) for determining the amount of the special
assessment and the SAIF-assessable deposits of the
institution on March 31, 1996, or such other date in
calendar year 1996 as the Board of Directors determines
to be appropriate.
(4) Due date of 2d assessment.--The date established
by the Board of Directors for the payment of the
assessment under paragraph (3) by a depository
institution shall be the earliest practicable date
which the Board of Directors determines to be
appropriate, which is at least 15 days after the date
used by the Board of Directors under paragraph (3).
(5) Supplemental special assessment.--An insured
depository institution which makes an election under
paragraph (1) shall pay a supplemental special
assessment, at the same time the payment under
paragraph (3) is made, in an amount equal to the
product of--
(A) 50 percent of the rate determined by the
Board of Directors under subsection (a) for
determining the amount of the special
assessment; and
(B) 95 percent of the amount by which the
SAIF-assessable deposits used by the Board of
Directors for determining the amount of the 1st
assessment under paragraph (2) exceeds, if any,
the SAIF-assessable deposits used by the Board
for determining the amount of the 2d assessment
under paragraph (3).
(h) Adjustment of Special Assessment for Certain Bank
Insurance Fund Member Banks.--
(1) In general.--For purposes of computing the
special assessment imposed under this section with
respect to a Bank Insurance Fund member bank, the
amount of any deposits of any insured depository
institution which section 5(d)(3) of the Federal
Deposit Insurance Act treats as insured by the Savings
Association Insurance Fund shall be reduced by 20
percent--
(A) if the adjusted attributable deposit
amount of the Bank Insurance Fund member bank
is less than 50 percent of the total domestic
deposits of that member bank as of June 30,
1995; or
(B) if, as of June 30, 1995, the Bank
Insurance Fund member--
(i) had an adjusted attributable
deposit amount equal to less than 75
percent of the total assessable
deposits of that member bank;
(ii) had total assessable deposits
greater than $5,000,000,000; and
(iii) was owned or controlled by a
bank holding company that owned or
controlled insured depository
institutions having an aggregate amount
of deposits insured or treated as
insured by the Bank Insurance Fund
greater than the aggregate amount of
deposits insured or treated as insured
by the Savings Association Insurance
Fund.
(2) Adjusted attributable deposit amount.--For
purposes of this subsection, the ``adjusted
attributable deposit amount; shall be determined in
accordance with section 5(d)(3)(C) of the Federal
Deposit Insurance Act.
(i) Adjustment to the Adjusted Attributable Deposit Amount
for Certain Bank Insurance Fund Member Banks.--Section 5(d)(3)
of the Federal Deposit Insurance Act (12 U.S.C. 1815(d)(3)) is
amended--
(1) in subparagraph (C), by striking ``The adjusted
attributable deposit amount'' and inserting ``Except as
provided in subparagraph (K), the adjusted attributable
deposit amount''; and
(2) by adding at the end the following new
subparagraph:
``(K) Adjustment of adjusted attributable
deposit amount.--The amount determined under
subparagraph (C)(i) for deposits acquired by
March 31, 1995, shall be reduced by 20 percent
for purposes of computing the adjusted
attributable deposit amount for the payment of
any assessment for any semiannual period after
December 31, 1995 (other than the special
assessment imposed under section 2011(a) of the
Balanced Budget Act of 1995), for a Bank
Insurance Fund member bank that, as of June 30,
1995--
``(i) had an adjusted attributable
deposit amount that was less than 50
percent of the total deposits of that
member bank; or
``(ii)(I) had an adjusted
attributable deposit amount equal to
less than 75 percent of the total
assessable deposits of that member
bank;
``(II) had total assessable deposits
greater than $5,000,000,000; and
``(III) was owned or controlled by a
bank holding company that owned or
controlled insured depository
institutions having an aggregate amount
of deposits insured or treated as
insured by the Bank Insurance Fund
greater than the aggregate amount of
deposits insured or treated as insured
by the Savings Association Insurance
Fund.''.
(j) Adjustment of Special Assessment for Certain Savings
Associations.--
(1) Special assessment reduction.--For purposes of
computing the special assessment imposed under this
section, in the case of any converted association, the
amount of any deposits of such association which were
insured by the Savings Association Insurance Fund as of
March 31, 1995, shall be reduced by 20 percent.
(2) Converted association.--For purposes of this
subsection, the term ``converted association'' means--
(A) any Federal savings association--
(i) that is a member of the Savings
Association Insurance Fund and that has
deposits subject to assessment by that
fund which did not exceed
$4,000,000,000, as of March 31, 1995;
and
(ii) that had been, or is a successor
by merger, acquisition, or otherwise to
an institution that had been, a State
savings bank, the deposits of which
were insured by the Federal Deposit
Insurance Corporation prior to August
9, 1989, that converted to a Federal
savings association pursuant to section
5(i) of the Home Owners Loan Act prior
to January 1, 1985;
(B) a State depository institution that is a
member of the Savings Association Insurance
Fund that had been a State savings bank prior
to October 15, 1982, and was a Federal savings
association on August 9, 1989;
(C) an insured bank that--
(i) was established de novo in order
to acquire the deposits of a savings
association in default or in danger of
default;
(ii) did not open for business before
acquiring the deposits of such savings
association; and
(iii) was a Savings Association
Insurance Fund member as of the date of
enactment of this Act; and
(D) an insured bank that--
(i) resulted from a savings
association before December 19, 1991,
in accordance with section 5(d)(2)(G)
of the Federal Deposit Insurance Act;
and
(ii) had an increase in its capital
in conjunction with the conversion in
an amount equal to more than 75 percent
of the capital of the institution on
the day before the date of the
conversion.
SEC. 2012. FINANCING CORPORATION ASSESSMENTS SHARED PROPORTIONALLY BY
ALL INSURED DEPOSITORY INSTITUTIONS.
(a) In General.--Section 21 of the Federal Home Loan Bank
Act (12 U.S.C. 1441) is amended--
(1) in subsection (f)(2)--
(A) in the matter immediately preceding
subparagraph (A)--
(i) by striking ``Savings Association
Insurance Fund member'' and inserting
``insured depository institution''; and
(ii) by striking ``members'' and
inserting ``institutions''; and
(B) by striking ``, except that--'' and all
that follows through the end of the paragraph
and inserting ``, except that--
``(A) the Financing Corporation shall have
first priority to make the assessment; and
``(B) no limitation under clause (i) or (iii)
of section 7(b)(2)(A) of the Federal Deposit
Insurance Act shall apply for purposes of this
paragraph.''; and
(2) in subsection (k)--
(A) by striking ``section--'' and inserting
``section, the following definitions shall
apply:'';
(B) by striking paragraph (1);
(C) by redesignating paragraphs (2) and (3)
as paragraphs (1) and (2), respectively; and
(D) by adding at the end the following new
paragraph:
``(3) Insured depository institution.--The term
`insured depository institution' has the same meaning
as in section 3 of the Federal Deposit Insurance
Act.''.
(b) Conforming Amendment.--Section 7(b)(2) of the Federal
Deposit Insurance Act (12 U.S.C. 1817(b)(2)) is amended by
striking subparagraph (D).
(c) Effective Date.--This section and the amendments made
by this section shall become effective on January 1, 1996.
SEC. 2013. MERGER OF BIF AND SAIF.
(a) In General.--
(1) Merger.--The Bank Insurance Fund and the Savings
Association Insurance Fund shall be merged into the
Deposit Insurance Fund established by section 11(a)(4)
of the Federal Deposit Insurance Act, as amended by
this section.
(2) Disposition of assets and liabilities.--All
assets and liabilities of the Bank Insurance Fund and
the Savings Association Insurance Fund shall be
transferred to the Deposit Insurance Fund.
(3) No separate existence.--The separate existence of
the Bank Insurance Fund and the Savings Association
Insurance Fund shall cease.
(b) Special Reserve of the Deposit Insurance Fund.--
(1) In general.--Immediately before the merger of the
Bank Insurance Fund and the Savings Association
Insurance Fund, if the reserve ratio of the Savings
Association Insurance Fund exceeds the designated
reserve ratio, the amount by which that reserve ratio
exceeds the designated reserve ratio shall be placed in
the Special Reserve of the Deposit Insurance Fund,
established under section 11(a)(5) of the Federal
Deposit Insurance Act, as amended by this section.
(2) Definition.--For purposes of this subsection, the
term ``reserve ratio'' means the ratio of the net worth
of the Savings Association Insurance Fund to aggregate
estimated insured deposits held in all Savings
Association Insurance Fund members.
(c) Effective Date.--This section and the amendments made
by this section shall become effective on January 1, 1998, if
no insured depository institution is a savings association on
that date.
(d) Technical and Conforming Amendments.--
(1) Deposit insurance fund.--Section 11(a)(4) of the
Federal Deposit Insurance Act (12 U.S.C. 1821(a)(4)) is
amended--
(A) by redesignating subparagraph (B) as
subparagraph (C);
(B) by striking subparagraph (A) and
inserting the following:
``(A) Establishment.--There is established
the Deposit Insurance Fund, which the
Corporation shall--
``(i) maintain and administer;
``(ii) use to carry out its insurance
purposes in the manner provided by this
subsection; and
``(iii) invest in accordance with
section 13(a).
``(B) Uses.--The Deposit Insurance Fund shall
be available to the Corporation for use with
respect to Deposit Insurance Fund members.'';
and
(C) by striking ``(4) General provisions
relating to funds.--'' and inserting the
following:
``(4) Establishment of the deposit insurance fund.--
''.
(2) Other references.--Section 11(a)(4)(C) of the
Federal Deposit Insurance Act (12 U.S.C. 1821(a)(4)(C),
as redesignated by paragraph (1) of this subsection) is
amended by striking ``Bank Insurance Fund and the
Savings Association Insurance Fund'' and inserting
``Deposit Insurance Fund''.
(3) Deposits into fund.--Section 11(a)(4) of the
Federal Deposit Insurance Act (12 U.S.C. 1821(a)(4)) is
amended by adding at the end the following new
subparagraph:
``(D) Deposits.--All amounts assessed against
insured depository institutions by the
Corporation shall be deposited in the Deposit
Insurance Fund.''
(4) Special reserve of deposits.--Section 11(a)(5) of
the Federal Deposit Insurance Act (12 U.S.C.
1821(a)(5)) is amended to read as follows:
``(5) Special reserve of deposit insurance fund.--
``(A) Establishment.--
``(i) In general.--There is
established a Special Reserve of the
Deposit Insurance Fund, which shall be
administered by the Corporation and
shall be invested in accordance with
section 13(a).
``(ii) Limitation.--The Corporation
shall not provide any assessment
credit, refund, or other payment from
any amount in the Special Reserve.
``(B) Emergency use of special reserve.--
Notwithstanding subparagraph (A)(ii), the
Corporation may, in its sole discretion,
transfer amounts from the Special Reserve to
the Deposit Insurance Fund, for the purposes
set forth in paragraph (4), only if--
``(i) the reserve ratio of the
Deposit Insurance Fund is less than 50
percent of the designated reserve
ratio; and
``(ii) the Corporation expects the
reserve ratio of the Deposit Insurance
Fund to remain at less than 50 percent
of the designated reserve ratio for
each of the next 4 calendar quarters.
``(C) Exclusion of special reserve in
calculating reserve ratio.--Notwithstanding any
other provision of law, any amounts in the
Special Reserve shall be excluded in
calculating the reserve ratio of the Deposit
Insurance Fund under section 7.''.
(5) Federal home loan bank act.--Section
21B(f)(2)(C)(ii) of the Federal Home Loan Bank Act (12
U.S.C. 1441b(f)(2)(C)(ii)) is amended--
(A) in subclause (I), by striking ``to
Savings Associations Insurance Fund members''
and inserting ``to insured depository
institutions, and their successors, which were
Savings Association Insurance Fund members on
September 1, 1995''; and
(B) in subclause (II), by striking ``to
Savings Associations Insurance Fund members''
and inserting ``to insured depository
institutions, and their successors, which were
Savings Association Insurance Fund members on
September 1, 1995''.
(6) Repeals.--
(A) Section 3.--Section 3(y) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(y)) is
amended to read as follows:
``(y) Definitions Relating to the Deposit Insurance Fund.--
The term--
``(1) Deposit insurance fund.--The term `Deposit
Insurance Fund' means the fund established under
section 11(a)(4).
``(2) Reserve ratio.--The term `reserve ratio' means
the ratio of the net worth of the Deposit Insurance
Fund to aggregate estimated insured deposits held in
all insured depository institutions.
``(3) Designated reserve ratio.--The designated
reserve ratio of the Deposit Insurance Fund for each
year shall be--
``(A) 1.25 percent of estimated insured
deposits; or
``(B) a higher percentage of estimated
insured deposits that the Board of Directors
determines to be justified for that year by
circumstances raising a significant risk of
substantial future losses to the fund.''.
(B) Section 7.--Section 7 of the Federal
Deposit Insurance Act (12 U.S.C. 1817) is
amended--
(i) by striking subsection (l);
(ii) by redesignating subsections (m)
and (n) as subsections (l) and (m),
respectively; and
(iii) in subsection (b)(2), by
striking subparagraphs (B) and (F), and
by redesignating subparagraphs (C),
(E), (G), and (H) as subparagraphs (B)
through (E), respectively.
(C) Section 11.--Section 11(a) of the Federal
Deposit Insurance Act (12 U.S.C. 1821(a)) is
amended--
(i) by striking paragraphs (6) and
(7); and
(ii) by redesignating paragraph (8)
as paragraph (6).
(7) Section 5136 of the revised statutes.--Paragraph
Eleventh of section 5136 of the Revised Statutes (12
U.S.C. 24) is amended in the fifth sentence, by
striking ``affected deposit insurance fund'' and
inserting ``Deposit Insurance Fund''.
(8) Investments promoting public welfare; limitations
on aggregate investments.--The 23d undesignated
paragraph of section 9 of the Federal Reserve Act (12
U.S.C. 338a) is amended in the fourth sentence, by
striking ``affected deposit insurance fund'' and
inserting ``Deposit Insurance Fund''.
(9) Advances to critically undercapitalized
depository institutions.--Section 10B(b)(3)(A)(ii) of
the Federal Reserve Act (12 U.S.C. 347b(b)(3)(A)(ii))
is amended by striking ``any deposit insurance fund
in'' and inserting ``the Deposit Insurance Fund of''.
(10) Amendments to the balanced budget and emergency
deficit control act of 1985.--Section 255(g)(1)(A) of
the Balanced Budget and Emergency Deficit Control Act
of 1985 (2 U.S.C. 905(g)(1)(A)) is amended--
(A) by striking ``Bank Insurance Fund'' and
inserting ``Deposit Insurance Fund''; and
(B) by striking ``Federal Deposit Insurance
Corporation, Savings Association Insurance
Fund;''.
(11) Further amendments to the federal home loan bank
act.--The Federal Home Loan Bank Act (12 U.S.C. 1421 et
seq.) is amended--
(A) in section 11(k) (12 U.S.C. 1431(k))--
(i) in the subsection heading, by
striking, ``SAIF'' and inserting ``the
Deposit Insurance Fund''; and
(ii) by striking ``Savings
Association Insurance Fund'' each place
such term appears and inserting
``Deposit Insurance Fund'';
(B) in section 21A(b)(4)(B) (12 U.S.C.
1441a(b)(4)(B)), by striking ``affected deposit
insurance fund'' and inserting ``Deposit
Insurance Fund'';
(C) in section 21A(b)(6)(B) (12 U.S.C.
1441a(b)(6)(B))--
(i) in the subparagraph heading, by
striking ``SAIF-insured banks'' and
inserting ``Charter conversions''; and
(ii) by striking ``Savings
Association Insurance Fund member'' and
inserting ``savings association'';
(D) in section 21A(b)(10)(A)(iv)(II) (12
U.S.C. 1441a(b)(10)(A)(iv)(II)), by striking
``Savings Association Insurance Fund'' and
inserting ``Deposit Insurance Fund'';
(E) in section 21B(e) (12 U.S.C. 1441b(e))--
(i) in paragraph (5), by inserting
``as of the date of funding'' after
``Savings Association Insurance Fund
members'' each place such term appears;
(ii) by striking paragraph (7); and
(iii) by redesignating paragraph (8)
as paragraph (7); and
(F) in section 21B(k) (12 U.S.C. 1441b(k))--
(i) by striking paragraph (8); and
(ii) by redesignating paragraphs (9)
and (10) as paragraphs (8) and (9),
respectively.
(12) Amendments to the home owners' loan act.--The
Home Owners' Loan Act (12 U.S.C. 1461 et seq.) is
amended--
(A) in section 5 (12 U.S.C. 1464)--
(i) in subsection (c)(5)(A), by
striking ``that is a member of the Bank
Insurance Fund'';
(ii) in subsection (c)(6), by
striking ``As used in this subsection--
'' and inserting ``For purposes of this
subsection, the following definitions
shall apply:'';
(iii) in subsection (o)(1), by
striking ``that is a Bank Insurance
Fund member'';
(iv) in subsection (o)(2)(A), by
striking ``a Bank Insurance Fund member
until such time as it changes its
status to a Savings Association
Insurance Fund member'' and inserting
``insured by the Deposit Insurance
Fund'';
(v) in subsection (t)(5)(D)(iii)(II),
by striking ``affected deposit
insurance fund'' and inserting
``Deposit Insurance Fund'';
(vi) in subsection (t)(7)(C)(i)(I),
by striking ``affected deposit
insurance fund'' and inserting
``Deposit Insurance Fund''; and
(vii) in subsection (v)(2)(A)(i), by
striking ``, the Savings Association
Insurance Fund'' and inserting ``or the
Deposit Insurance Fund''; and
(B) in section 10 (12 U.S.C. 1467a)--
(i) in subsection
(e)(1)(A)(iii)(VII), by adding ``or''
at the end;
(ii) in subsection (e)(1)(A)(iv), by
adding ``and'' at the end;
(iii) in subsection (e)(1)(B), by
striking ``Savings Association
Insurance Fund or Bank Insurance Fund''
and inserting ``Deposit Insurance
Fund'';
(iv) in subsection (e)(2), by
striking ``Savings Association
Insurance Fund or the Bank Insurance
Fund'' and inserting ``Deposit
Insurance Fund''; and
(v) in subsection (m)(3), by striking
subparagraph (E), and by redesignating
subparagraphs (F), (G), and (H) as
subparagraphs (E), (F), and (G),
respectively.
(13) Amendments to the national housing act.--The
National Housing Act (12 U.S.C. 1701 et seq.) is
amended--
(A) in section 317(b)(1)(B) (12 U.S.C.
1723i(b)(1)(B)), by striking ``Bank Insurance
Fund for banks or through the Savings
Association Insurance Fund for savings
associations'' and inserting ``Deposit
Insurance Fund''; and
(B) in section 526(b)(1)(B)(ii) (12 U.S.C.
1735f-14(b)(1)(B)(ii)), by striking ``Bank
Insurance Fund for banks and through the
Savings Association Insurance Fund for savings
associations'' and inserting ``Deposit
Insurance Fund''.
(14) Further amendments to the federal deposit
insurance act.--The Federal Deposit Insurance Act (12
U.S.C. 1811 et seq.) is amended--
(A) in section 3(a)(1) (12 U.S.C.
1813(a)(1)), by striking subparagraph (B) and
inserting the following:
``(B) includes any former savings
association.'';
(B) in section 5(b)(5) (12 U.S.C.
1815(b)(5)), by striking ``the Bank Insurance
Fund or the Savings Association Insurance
Fund;'' and inserting ``Deposit Insurance
Fund,'';
(C) in section 5(d) (12 U.S.C. 1815(d)), by
striking paragraphs (2) and (3);
(D) in section 5(d)(1) (12 U.S.C.
1815(d)(1))--
(i) in subparagraph (A), by striking
``reserve ratios in the Bank Insurance
Fund and the Savings Association
Insurance Fund'' and inserting ``the
reserve ratio of the Deposit Insurance
Fund'';
(ii) by striking subparagraph (B) and
inserting the following:
``(2) Fee credited to the deposit insurance fund.--
The fee paid by the depository institution under
paragraph (1) shall be credited to the Deposit
Insurance Fund.'';
(iii) by striking ``(1) Uninsured
institutions.--''; and
(iv) by redesignating subparagraphs
(A) and (C) as paragraphs (1) and (3),
respectively, and moving the margins 2
ems to the left;
(E) in section 5(e) (12 U.S.C. 1815(e))--
(i) in paragraph (5)(A), by striking
``Bank Insurance Fund or the Savings
Association Insurance Fund'' and
inserting ``Deposit Insurance Fund'';
(ii) by striking paragraph (6); and
(iii) by redesignating paragraphs
(7), (8), and (9) as paragraphs (6),
(7), and (8), respectively;
(F) in section 6(5) (12 U.S.C. 1816(5)), by
striking ``Bank Insurance Fund or the Savings
Association Insurance Fund'' and inserting
``Deposit Insurance Fund'';
(G) in section 7(b) (12 U.S.C. 1817(b))--
(i) in paragraph (1)(D), by striking
``each deposit insurance fund'' and
inserting ``the Deposit Insurance
Fund'';
(ii) in clauses (i)(I) and (iv) of
paragraph (2)(A), by striking ``each
deposit insurance fund'' each place
such term appears and inserting ``the
Deposit Insurance Fund'';
(iii) in paragraph (2)(A)(iii), by
striking ``a deposit insurance fund''
and inserting ``the Deposit Insurance
Fund'';
(iv) by striking clause (iv) of
paragraph (2)(A);
(v) in paragraph (2)(C) (as
redesignated by paragraph (6)(B) of
this subsection)--
(I) by striking ``any deposit
insurance fund'' and inserting
``the Deposit Insurance Fund'';
and
(II) by striking ``that
fund'' each place such term
appears and inserting ``the
Deposit Insurance Fund'';
(vi) in paragraph (2)(D) (as
redesignated by paragraph (6)(B) of
this subsection)--
(I) in the subparagraph
heading, by striking ``funds
achieve'' and inserting ``fund
achieves''; and
(II) by striking ``a deposit
insurance fund'' and inserting
``the Deposit Insurance Fund'';
(vii) in paragraph (3)--
(I) in the paragraph heading,
by striking ``funds'' and
inserting ``fund'';
(II) by striking ``that
fund'' each place such term
appears and inserting the ``the
Deposit Insurance Fund'';
(III) in subparagraph (A), by
striking ``Except as provided
in paragraph (2)(F), if'' and
inserting ``If'';
(IV) in subparagraph (A) by
striking ``any deposit
insurance fund'' and inserting
``the Deposit Insurance Fund'';
and
(V) by striking subparagraphs
(C) and (D) and inserting the
following:
``(C) Amending schedule.--The Corporation
may, by regulation, amend a schedule
promulgated under subparagraph (B).''; and
(viii) in paragraph (6)--
(I) by striking ``any such
assessment'' and inserting
``any such assessment is
necessary'';
(II) by striking ``(A) is
necessary--'';
(III) by striking
subparagraph (B);
(IV) by redesignating clauses
(i), (ii), and (iii) as
subparagraphs (A), (B), and
(C), respectively, and moving
the margin 2 ems to the left;
and
(V) in subparagraph (C) (as
redesignated), by striking ``;
and'' and inserting a period;
(H) in section 11(f)(1) (12 U.S.C.
1821(f)(1)), by striking ``, except that--''
and all that follows through the end of the
paragraph and inserting a period;
(I) in section 11(i)(3) (12 U.S.C.
1821(i)(3))--
(i) by striking subparagraph (B);
(ii) by redesignating subparagraph
(C) as subparagraph (B); and
(iii) in subparagraph (B) (as
redesignated), by striking
``subparagraphs (A) and (B)'' and
inserting ``subparagraph (A)'';
(J) in section 11A(a) (12 U.S.C. 1821a(a))--
(i) in paragraph (2), by striking
``liabilities.--'' and all that follows
through ``Except'' and inserting
``liabilities.--Except'';
(ii) by striking paragraph (2)(B);
and
(iii) in paragraph (3), by striking
``the Bank Insurance Fund, the Savings
Association Insurance Fund,'' and
inserting ``the Deposit Insurance
Fund,'';
(K) in section 11A(b) (12 U.S.C. 1821a(b)),
by striking paragraph (4);
(L) in section 11a(f) (12 U.S.C. 1821a(f)),
by striking ``Savings Association Insurance
Fund'' and inserting ``Deposit Insurance
Fund'';
(M) in section 13 (12 U.S.C. 1823)--
(i) in subsection (a)(1), by striking
``Bank Insurance Fund, the Savings
Association Insurance Fund,'' and
inserting ``Deposit Insurance Fund, the
Special Reserve of the Deposit
Insurance Fund,'';
(ii) in subsection (c)(4)(E)--
(I) in the subparagraph
heading, by striking ``funds''
and inserting ``fund''; and
(II) in clause (i), by
striking ``any insurance fund''
and inserting ``the Deposit
Insurance Fund'';
(iii) in subsection (c)(4)(G)(ii)--
(I) by striking ``appropriate
insurance fund'' and inserting
``Deposit Insurance Fund'';
(II) by striking ``the
members of the insurance fund
(of which such institution is a
member)'' and inserting
``insured depository
institutions'';
(III) by striking ``each
member's'' and inserting ``each
insured depository
institution's''; and
(IV) by striking ``the
member's'' each place such term
appears and inserting ``the
institution's'';
(iv) in subsection (c), by striking
paragraph (11);
(v) in subsection (h), by striking
``Bank Insurance Fund'' and inserting
``Deposit Insurance Fund'';
(vi) in subsection (K)(4)(B)(i), by
striking ``Savings Association
Insurance Fund'' and inserting
``Deposit Insurance Fund''; and
(vii) in subsection (k)(5)(A), by
striking ``Savings Association
Insurance Fund'' and inserting
``Deposit Insurance Fund'';
(N) in section 14(a) (12 U.S.C. 1824(a)) in
the fifth sentence--
(i) by striking ``Bank Insurance Fund
or the Savings Association Insurance
Fund'' and inserting ``Deposit
Insurance Fund''; and
(ii) by striking ``each such fund''
and inserting ``the Deposit Insurance
Fund'';
(O) in section 14(b) (12 U.S.C. 1824(b)), by
striking ``Bank Insurance Fund or Savings
Association Insurance Fund'' and inserting
``Deposit Insurance Fund'';
(P) in section 14(c) (12 U.S.C. 1824(c)), by
striking paragraph (3);
(Q) in section 14(d) (12 U.S.C. 1824(d))--
(i) by striking ``BIF'' each place
such term appears and inserting
``DIF''; and
(ii) by striking ``Bank Insurance
Fund'' each place such term appears and
inserting ``Deposit Insurance Fund'';
(R) in section 15(c)(5) (12 U.S.C.
1825(c)(5))--
(i) by striking ``the Bank Insurance
Fund or Savings Association Insurance
Fund, respectively'' each place such
term appears and inserting ``the
Deposit Insurance Fund''; and
(ii) in subparagraph (B), by striking
``the Bank Insurance Fund or the
Savings Association Insurance Fund,
respectively'' and inserting ``the
Deposit Insurance Fund'';
(S) in section 17(a) (12 U.S.C. 1827(a))--
(i) in the subsection heading, by
striking ``BIF, SAIF,'' and inserting
``the Deposit Insurance Fund''; and
(ii) in paragraph (1), by striking
``the Bank Insurance Fund, the Savings
Association Insurance Fund'' each place
such term appears and inserting ``the
Deposit Insurance Fund'';
(T) in section 17(d) (12 U.S.C. 1827(d)), by
striking ``the Bank Insurance Fund, the Savings
Association Insurance Fund,'' each place such
term appears and inserting ``the Deposit
Insurance Fund'';
(U) in section 18(m)(3) (12 U.S.C.
1828(m)(3))--
(i) by striking ``Savings Association
Insurance Fund'' each place such term
appears and inserting ``Deposit
Insurance Fund''; and
(ii) in subparagraph (C), by striking
``or the Bank Insurance Fund'';
(V) in section 18(p) (12 U.S.C. 1828(p)), by
striking ``deposit insurance funds'' and
inserting ``Deposit Insurance Fund'';
(W) in section 24 (12 U.S.C. 1831a) in
subsections (a)(1) and (d)(1)(A), by striking
``appropriate deposit insurance fund'' each
place such term appears and inserting ``Deposit
Insurance Fund'';
(X) in section 28 (12 U.S.C. 1831e), by
striking ``affected deposit insurance fund''
each place such term appears and inserting
``Deposit Insurance Fund'';
(Y) by striking section 31 (12 U.S.C. 1831h);
(Z) in section 36(i)(3) (12 U.S.C.
1831m(i)(3)) by striking ``affected deposit
insurance fund'' and inserting ``Deposit
Insurance Fund'';
(AA) in section 38(a) (12 U.S.C. 1831o(a)) in
the subsection heading, by striking ``Funds''
and inserting ``Fund'';
(BB) in section 38(k) (12 U.S.C. 1831o(k))--
(i) in paragraph (1), by striking ``a
deposit insurance fund'' and inserting
``the Deposit Insurance Fund''; and
(ii) in paragraph (2)(A)--
(I) by striking ``A deposit
insurance fund'' and inserting
``The Deposit Insurance Fund'';
and
(II) by striking ``the
deposit insurance fund's
outlays'' and inserting ``the
outlays of the Deposit
Insurance Fund''; and
(CC) in section 38(o) (12 U.S.C. 1831o(o))--
(i) by striking ``Associations.--''
and all that follows through
``Subsections (e)(2)'' and inserting
``Associations.--Subsections (e)(2)'';
(ii) by redesignating subparagraphs
(A), (B), and (C) as paragraphs (1),
(2), and (3), respectively, and moving
the margins 2 ems to the left; and
(iii) in paragraph (1) (as
redesignated), by redesignating clauses
(i) and (ii) as subparagraphs (A) and
(B), respectively, and moving the
margins 2 ems to the left.
(15) Amendments to the financial institutions reform,
recovery, and enforcement act of 1989.--The Financial
Institutions Reform, Recovery, and Enforcement Act
(Public Law 101-73; 103 Stat. 183) is amended--
(A) in section 951(b)(3)(B) (12 U.S.C.
1833a(b)(3)(B)), by striking ``Bank Insurance
Fund, the Savings Association Insurance Fund,''
and inserting ``Deposit Insurance Fund''; and
(B) in section 1112(c)(1)(B) (12 U.S.C.
3341(c)(1)(B)), by striking ``Bank Insurance
Fund, the Savings Association Insurance Fund,''
and inserting ``Deposit Insurance Fund''.
(16) Amendment to the bank enterprise act of 1991.--
Section 232(a)(1) of the Bank Enterprise Act of 1991
(12 U.S.C. 1834(a)(1)) is amended by striking ``section
7(b)(2)(H)'' and inserting ``section 7(b)(2)(G)''.
(17) Amendment to the bank holding company act.--
Section 2(j)(2) of the Bank Holding Company Act of 1956
(12 U.S.C. 1841(j)(2)) is amended by striking ``Savings
Association Insurance Fund'' and inserting ``Deposit
Insurance Fund''.
SEC. 2014. CREATION OF SAIF SPECIAL RESERVE.
Section 11(a)(6) of the Federal Deposit Insurance Act (12
U.S.C. 1821(a)(6)) is amended by adding at the end the
following new subparagraph:
``(L) Establishment of saif special
reserve.--
``(i) Establishment.--If, on January
1, 1998, the reserve ratio of the
Savings Association Insurance Fund
exceeds the designated reserve ratio,
there is established a Special Reserve
of the Savings Association Insurance
Fund, which shall be administered by
the Corporation and shall be invested
in accordance with section 13(a).
``(ii) Amounts in special reserve.--
If, on January 1, 1998, the reserve
ratio of the Savings Association
Insurance Fund exceeds the designated
reserve ratio, the amount by which the
reserve ratio exceeds the designated
reserve ratio shall be placed in the
Special Reserve of the Savings
Association Insurance Fund established
by clause (i).
``(iii) Limitation.--The Corporation
shall not provide any assessment
credit, refund, or other payment from
any amount in the Special Reserve of
the Savings Association Insurance Fund.
``(iv) Emergency use of special
reserve.--Notwithstanding clause (iii),
the Corporation may, in its sole
discretion, transfer amounts from the
Special Reserve of the Savings
Association Insurance Fund to the
Savings Association Insurance Fund for
the purposes set forth in paragraph
(4), only if--
``(I) the reserve ratio of
the Savings Association
Insurance Fund is less than 50
percent of the designated
reserve ratio; and
``(II) the Corporation
expects the reserve ratio of
the Savings Association
Insurance Fund to remain at
less than 50 percent of the
designated reserve ratio for
each of the next 4 calendar
quarters.
``(v) Exclusion of special reserve in
calculating reserve ratio.--
Notwithstanding any other provision of
law, any amounts in the Special Reserve
of the Savings Association Insurance
Fund shall be excluded in calculating
the reserve ratio of the Savings
Association Insurance Fund.''.
SEC. 2015. REFUND OF AMOUNTS IN DEPOSIT INSURANCE FUND IN EXCESS OF
DESIGNATED RESERVE AMOUNT.
Subsection (e) of section 7 of the Federal Deposit
Insurance Act (12 U.S.C. 1817(e)) is amended to read as
follows:
``(e) Refunds.--
``(1) Overpayments.--In the case of any payment of an
assessment by an insured depository institution in
excess of the amount due to the Corporation, the
Corporation may--
``(A) refund the amount of the excess payment
to the insured depository institution; or
``(B) credit such excess amount toward the
payment of subsequent semiannual assessments
until such credit is exhausted.
``(2) Balance in insurance fund in excess of
designated reserve.--
``(A) In general.--Subject to subparagraphs
(B) and (C), if, as of the end of any
semiannual assessment period, the amount of the
actual reserves in--
``(i) the Bank Insurance Fund (until
the merger of such fund into the
Deposit Insurance Fund pursuant to
section 2013 of the Balanced Budget Act
of 1995); or
``(ii) the Deposit Insurance Fund
(after the establishment of such fund),
exceeds the balance required to meet the
designated reserve ratio applicable with
respect to such fund, such excess amount shall
be refunded to insured depository institutions
by the Corporation on such basis as the Board
of Directors determines to be appropriate,
taking into account the factors considered
under the risk-based assessment system.
``(B) Refund not to exceed previous
semiannual assessment.--The amount of any
refund under this paragraph to any member of a
deposit insurance fund for any semiannual
assessment period may not exceed the total
amount of assessments paid by such member to
the insurance fund with respect to such period.
``(C) Refund limitation for certain
institutions.--No refund may be made under this
paragraph with respect to the amount of any
assessment paid for any semiannual assessment
period by any insured depository institutions
described in clause (v) of subsection
(b)(2)(A).''.
SEC. 2016. ASSESSMENT RATES FOR SAIF MEMBERS MAY NOT BE LESS THAN
ASSESSMENT RATES FOR BIF MEMBERS.
Section 7(b)(2)(C) of the Federal Deposit Insurance Act (12
U.S.C. 1817)(2)(E), as redesignated by section 2013(d)(6) of
this Act) is amended--
(1) by striking ``and'' at the end of clause (i);
(2) by striking the period at the end of clause (ii)
and inserting ``; and''; and
(3) by adding at the end of the following new clause:
``(iii) notwithstanding any other
provision of this subsection, during
the period beginning on the date of
enactment of the Balanced Budget Act of
1995, and ending on January 1, 1998,
the assessment rate for a Savings
Association Insurance Fund member may
not be less than the assessment rate
for a Bank Insurance Fund member that
poses a comparable risk to the deposit
insurance fund.''.
SEC. 2017. ASSESSMENTS AUTHORIZED ONLY IF NEEDED TO MAINTAIN THE
RESERVE RATIO OF A DEPOSIT INSURANCE FUND.
(a) In General.--Section 7(b)(2)(A)(i) of the Federal
Deposit Insurance Act (12 U.S.C. 1817(b)(2)(A)(i)) is amended
in the matter preceding subclause (I) by inserting ``when
necessary, and only to the extent necessary'' after ``insured
depository institutions''.
(b) Limitation on Assessment.--Section 7(b)(2)(A)(iii) of
the Federal Deposit Insurance Act (12 U.S.C.
1817(b)(2)(A)(iii)) is amended to read as follows:
``(iii) Limitation on assessment.--
Except as provided in clause (v), the
Board of Directors shall not set
semiannual assessments with respect to
a deposit insurance fund in excess of
the amount needed--
``(I) to maintain the reserve
ratio of the fund at the
designated reserve ratio; or
``(II) if the reserve ratio
is less than the designated
reserve ratio, to increase the
reserve ratio to the designated
reserve ratio.''.
(c) Exception to Limitation on Assessments.--Section
7(b)(2)(A) of the Federal Deposit Insurance Act (12 U.S.C.
1817(b)(2)(A)) is amended by adding at the end of the following
new clause:
``(v) Exception to limitation on
assessments.--The Board of Directors
may set semiannual assessments in
excess of the amount permitted under
clauses (i) and (iii) with respect to
insured depository institutions that
exhibit financial, operational, or
compliance weaknesses ranging from
moderately severe to unsatisfactory, or
are not well capitalized, as that term
is defined in section 38.''.
SEC. 2018. LIMITATION ON AUTHORITY OF OVERSIGHT BOARD TO CONTINUE TO
EMPLOY MORE THAN 18 OFFICERS AND EMPLOYEES.
(a) In General.--Section 21A(a) of the Federal Home Loan
Bank Act (12 U.S.C. 1441a(a)) is amended by adding at the end
the following new paragraph:
``(17) Phased-down operation of oversight board
following termination of corporation.--
``(A) Termination of authority to employ
staff.--Except as provided in subparagraph (B),
the authority of the Thrift Depositor
Protection Oversight Board under paragraph (5)
to establish officer and employee positions, to
compensate officers and employees of the Board,
and to provide other benefits for officers and
employees of the Board shall terminate as of
December 31, 1995.
``(B) Limited authority for employing
staff.--The Thrift Depositor Protection
Oversight Board may employ not more than 18
individuals, excluding any employee of any
other department or agency utilized by the
Board, to carry out the functions of the Board
during the period beginning on January 1, 1996
and ending on May 1, 1996, other than employees
whose employment is in the process of being
terminated in accordance with subparagraph (C).
``(C) Termination of employment of additional
employees required to be commenced.--The Thrift
Depositor Protection Oversight Board shall
commence terminating, not later than December
31, 1995, and in accordance with title 5,
United States Code, and applicable regulations
of the Office of Personnel Management, the
employment of any employee of the Board whose
continued employment by the Board after such
date is inconsistent with the requirement of
subparagraph (B).''.
(b) Technical and Conforming Amendments.--Section 21A(a)(5)
of the Federal Home Loan Bank Act (12 U.S.C. 1441a(a)(5)) is
amended in subparagraphs (B), (C), (D), and (E), by inserting
``subject to paragraph (17)'', after the closing parenthesis of
the subparagraph designation in each such subparagraph.
SEC. 2019. DEFINITIONS.
For purposes of this subtitle--
(1) the term ``Bank Insurance Fund'' means the fund
established pursuant to section (11)(a)(5)(A) of the
Federal Deposit Insurance Act, as that section existed
on the day before the date of enactment of this Act;
(2) the terms ``Bank Insurance Fund member'' and
``Savings Association Insurance Fund member'' have the
same meanings as in section 7(l) of the Federal Deposit
Insurance Act;
(3) the terms ``bank'', ``Board of Directors'',
``Corporation'', ``insured depository institution'',
``Federal savings association'', ``savings
association'', ``State savings bank'', and ``State
depository institution'' have the same meanings as in
section 3 of the Federal Deposit Insurance Act;
(4) the term ``Deposit Insurance Fund'' means the
fund established under section 11(a)(4) of the Federal
Deposit Insurance Act, as amended by section 2013(d) of
this Act;
(5) the term ``depository institution holding
company'' has the same meaning as in section 3 of the
Federal Deposit Insurance Act;
(6) the term ``designated reserve ratio'' has the
same meaning as in section 7(b)(2)(A)(iv) of the
Federal Deposit Insurance Act;
(7) the term ``Savings Association Insurance Fund''
means the fund established pursuant to section
11(a)(6)(A) of the Federal Deposit Insurance Act, as
that section existed on the day before the date of
enactment of this Act; and
(8) the term ``SAIF-assessable deposit'' means--
(A) a deposit that is subject to assessment
for purposes of the Savings Association
Insurance Fund under the Federal Deposit
Insurance Act; and
(B) a deposit that section 5(d)(3) of the
Federal Deposit Insurance Act treats as insured
by the Savings Association Insurance Fund.
Subtitle B--Housing
SEC. 2051. ANNUAL ADJUSTMENT FACTORS FOR OPERATING COSTS ONLY;
RESTRAINT ON RENT INCREASES.
(a) Annual Adjustment Factors for Operating Costs Only.--
Section 8(c)(2)(A) of the United States Housing Act of 1937 (42
U.S.C. 1437f(c)(2)(A)) is amended--
(1) by striking ``(2)(A)'' and inserting
``(2)(A)(i)'';
(2) by striking the second sentence and all that
follows through the end of the subparagraph; and
(3) by adding at the end of the following new clause:
``(ii) Each assistance contract under this section shall
provide that--
``(I) if the maximum monthly rent for a unit in a new
construction or substantial rehabilitation project to
be adjusted using an annual adjustment factor exceeds
100 percent of the fair market rent for an existing
dwelling unit in the market area, the Secretary shall
adjust the rent using an operating costs factor that
increases the rent to reflect increases in operating
costs in the market area; and
``(II) if the owner of a unit in a project described
in subclause (I) demonstrates that the adjusted rent
determined under subclause (I) would not exceed the
rent for an unassisted unit of similar quality, type,
and age in the same market area, as determined by the
Secretary, the Secretary shall use the otherwise
applicable annual adjustment factor.''.
(b) Restraint on Section 8 Rent Increases.--Section
8(c)(2)(A) of the United States Housing Act of 1937 (42 U.S.C.
1437f(c)(2)(A)), as amended by subsection (a), is amended by
adding at the end the following new clause:
``(iii)(I) Subject to subclause (II), with respect to any
unit assisted under this section that it occupied by the same
family at the time of the most recent annual rental adjustment,
if the assistance contract provides for the adjustment of the
maximum monthly rent by applying an annual adjustment factor,
and if the rent for the unit is otherwise eligible for an
adjustment based on the full amount of the annual adjustment
factor, 0.01 shall be subtracted from the amount of the annual
adjustment factor, except that the annual adjustment factor
shall not be reduced to less than 1.0.
``(II) With respect to any unit described in subclause (I)
that is assisted under the certificate program, the adjusted
rent shall not exceed the rent for a comparable unassisted unit
of similar quality, type, and age in the market area in which
the unit is located.''.
(c) Effective Date.--The amendments made by this section
shall become effective on October 1, 1995.
SEC. 2052. FORECLOSURE AVOIDANCE AND BORROWER ASSISTANCE.
(a) Foreclosure Avoidance.--Except as provided in
subsection (e), the last sentence of section 204(a) of the
National Housing Act (12 U.S.C. 1710(a)) is amended by
inserting before the period the following: ``: And provided
further, That the Secretary may pay insurance benefits to the
mortgagee to recompense the mortgagee for its actions to
provide an alternative to foreclosure of a mortgage that is in
default, which actions may include such actions as special
forbearance, loan modification, and deeds in lieu of
foreclosure, all upon such terms and conditions as the
mortgagee shall determine in the mortgagee's sole discretion
within guidelines provided by the Secretary, but which may not
include assignment of a mortgage to the Secretary: And provided
further, That for purposes of the preceding proviso, no action
authorized by the Secretary and no action taken, nor any
failure to act, by the Secretary or the mortgagee shall be
subject to judicial review''.
(b) Authority To Assist Mortgagors in Default.--Except as
provided in subsection (e), section 230 of the National Housing
Act (12 U.S.C. 1715u) is amended to read as follows:
``authority to assist mortgagors in default
``Sec. 230. (a) Payment of Partial Claim.--The Secretary
may establish a program for payment of a partial insurance
claim to a mortgagee that agrees to apply the claim amount to
payment of a mortgage on a 1- to 4-family residence that is in
default. Any such payment under such program to the mortgagee
shall be made in the Secretary's sole discretion and on terms
and conditions acceptable to the Secretary, except that--
``(1) the amount of the payment shall be in an amount
determined by the Secretary, which shall not exceed an
amount equivalent to 12 monthly mortgage payments and
any costs related to the default that are approved by
the Secretary; and
``(2) the mortgagor shall agree to repay the amount
of the insurance claim to the Secretary upon terms and
conditions acceptable to the Secretary.
The Secretary may pay the mortgagee, from the appropriate
insurance fund, in connection with any activities that the
mortgagee is required to undertake concerning repayment by the
mortgagor of the amount owed to the Secretary.
``(b) Assignment.--
``(1) Program authority.--The Secretary may establish
a program for assignment to the Secretary, upon request
of the mortgagee, of a mortgage on a 1- to 4-family
residence insured under this Act.
``(2) Program requirements.--The Secretary may accept
assignment of a mortgage under a program under this
subsection only if--
``(A) the mortgage was in default;
``(B) the mortgagee has modified the mortgage
to cure the default and provide for mortgage
payments within the reasonable ability of the
mortgagor to pay at interest rates not
exceeding current market interest rates; and
``(C) the Secretary arranges for servicing of
the assigned mortgage by a mortgagee (which may
include the assigning mortgagee) through
procedures that the Secretary has determined to
be in the best interests of the appropriate
insurance fund.
``(3) Payment of insurance benefits.--Upon accepting
assignment of a mortgage under the program under this
subsection, the Secretary may pay insurance benefits to
the mortgagee from the appropriate insurance fund in an
amount that the Secretary determines to be appropriate,
but which may not exceed the amount necessary to
compensate the mortgagee for the assignment and any
losses and expenses resulting from the mortgage
modification.
``(c) Prohibition of Judicial Review.--No decision by the
Secretary to exercise or forego exercising any authority under
this section shall be subject to judicial review.
``(d) Savings Provision.--Any mortgage for which the
mortgagor has applied to the Secretary, before the date of the
enactment of the Balanced Budget Act of 1995, for assignment
pursuant to subsection (c) of this section as in effect before
such date of enactment shall continue to be governed by the
provisions of this section in effect immediately before such
date of enactment.
``(e) Applicability of Other Laws.--No provision of this
Act or any other law shall be construed to require the
Secretary to provide an alternative to foreclosure for
mortgagees with mortgages on 1- to 4-family residences insured
by the Secretary under this Act, or to accept assignments of
such mortgages.''.
(c) Applicability of Amendments.--Except as provided in
subsection (e), the amendments made by subsections (a) and (b)
shall apply only with respect to mortgages insured under the
National Housing Act that are originated on or after October 1,
1995.
(d) Regulations.--Not later than the expiration of the 60-
day period beginning on the date of the enactment of this Act,
the Secretary of Housing and Urban Development shall issue
interim regulations to implement this section and the
amendments made by this section.
(e) Effectiveness and Applicability.--If this Act is
enacted after the date of the enactment of the Departments of
Veterans Affairs and Housing and Urban Development, and
Independent Agencies Appropriations Act, 1996--
(1) subsections (a), (b), (c), and (d) of this
section shall not take effect; and
(2) subsection (c) of the section relating to
foreclosure avoidance and borrower assistance in title
II of the Departments of Veterans Affairs and Housing
and Urban Development, and Independent Agencies
Appropriations Act, 1996, is amended by striking ``only
with respect to mortgages insured under the National
Housing Act that are originated before October 1,
1995'' and inserting ``to mortgages originated before,
on, and after October 1, 1995''.
TITLE II--COMMUNICATIONS AND SPECTRUM ALLOCATION PROVISIONS
SEC. 3001. SPECTRUM AUCTIONS.
(a) Extension and Expansion of Auction Authority.--
(1) Amendments.--Section 309(j) of the Communications
Act of 1934 (47 U.S.C. 309(j)) is amended--
(A) by striking paragraphs (1) and (2) and
inserting the following:
``(1) General authority.--If, consistent with the
obligations described in paragraph (6)(E), mutually
exclusive applications are accepted for any initial
license or construction permit, then the Commission
shall grant such license or permit to a qualified
applicant through a system of competitive bidding that
meets the requirements of this subsection.
``(2) Exemptions.--The competitive bidding authority
granted by this subsection shall not apply to licenses
or construction permits issued by the Commission--
``(A) that, as the result of the Commission
carrying out the obligations described in
paragraph (6)(E), are not mutually exclusive;
``(B) for public safety radio services,
including non-Government uses the sole or
principal purpose of which is to protect the
safety of life, health, and property and which
are not made commercially available to the
public; or
``(C) for initial licenses or construction
permits for new terrestrial digital television
services assigned by the Commission to existing
terrestrial broadcast licensees to replace
their current television licenses, unless--
``(i) the Commission, not later than
180 days after the date of enactment of
the Balanced Budget Act of 1995, after
notice and public comment, submits to
Congress a report on the use of the
authority provided in this subsection
for the assignment of initial licenses
or construction permits for use of the
electromagnetic spectrum allocated but
not assigned as of the date of
enactment of that Act for television
broadcast services; and
``(ii) the Congress amends this
subsection to authorize the use of the
authority provided by this subsection
for such licenses or permits.
Except as provided in this subparagraph, the
Commission may not assign initial licenses or
construction permits under this title to
terrestrial commercial television broadcast
licensees to replace their existing broadcast
licenses before November 15, 1996.''; and
(B) by striking ``1998'' in paragraph (11)
and inserting ``2002''.
(2) Conforming amendment.--Subsection (i) of section
309 of such Act is repealed.
(3) Effective date.--The amendment made by paragraph
(1)(A) shall not apply with respect to any license or
permit for a terrestrial radio or television broadcast
station for which the Federal Communications Commission
has accepted mutually exclusive applications on or
before the date of enactment of this Act.
(b) Commission Obligation To Make Additional Spectrum
Available by Auction.--
(1) In general.--The Federal Communications
Commission shall complete all actions necessary to
permit the assignment by September 30, 2002, by
competitive bidding pursuant to service 309(i) of the
Communications Act of 1934 (47 U.S.C. 309(j) of
licenses for the use of bands of frequencies that--
(A) individually span not less than 25
megahertz, unless a combination of smaller
bands can, notwithstanding the provisions of
paragraph (7) of such section, reasonably be
expected to produce greater receipts;
(B) in the aggregate span not less than 100
megahertz;
(C) are located below 3 gigahertz; and
(D) have not, as of the date of enactment of
this Act--
(i) been designated by Commission
regulation for assignment pursuant to
such section;
(ii) been identified by the Secretary
of Commerce pursuant to section 113 of
the National Telecommunications and
Information Administration Organization
Act; or
(iii) been reserved for Federal
Government use pursuant to section 305
of the Communications Act of 1934 (47
U.S.C. 305).
The Commission shall conduct the competitive
bidding for not less than one-half of such
aggregate spectrum by September 30, 2000.
(2) Criteria for reassignment.--In making available
bands of frequencies for competitive bidding pursuant
to paragraph (1), the Commission shall--
(A) seek to promote the most efficient use of
the spectrum;
(B) take into account the cost to incumbent
licensees of relocating existing uses to other
bands of frequencies or other means of
communication;
(C) take into account the needs of public
safety radio services;
(D) comply with the requirements of
international agreements concerning spectrum
allocations; and
(E) take into account the costs to satellite
service providers that could result from
multiple auctions of like spectrum
internationally for global satellite systems.
(3) Notification to ntia.--The Commission shall
notify the Secretary of Commerce if--
(A) the Commission is not able to provide for
the effective relocation of incumbent licensees
to bands of frequencies that are available to
the Commission for assignment; and
(B) the Commission has identified bands of
frequencies that are--
(i) suitable for the relocation of
such licensees; and
(ii) allocated for Federal Government
use, but that could be reallocated
pursuant to part B of the National
Telecommunications and Information
Administration Organization Act (as
amended by this section).
(c) Identification and Reallocation of Frequencies.--The
National Telecommunications and Information Administration
Organization Act (47 U.S.C. 901 et seq.) is amended--
(1) in section 113, by adding at the end the
following new subsections:
``(f) Additional Reallocation Report.--If the Secretary
receives a notice from the Commission pursuant to section
3001(b)(3) of the Balanced Budget Act of 1995, the Secretary
shall prepare and submit to the President and the Congress a
report recommending for reallocation for use other than by
Federal Government stations under section 305 of the 1934 Act
(47 U.S.C. 305), bands of frequencies that are suitable for the
uses identified in the Commission's notice.
``(g) Relocation of Federal Government Stations.--
``(1) In general.--In order to expedite the efficient
use of the electromagnetic spectrum and notwithstanding
section 3302(b) of title 31, United States Code, any
Federal entity which operates a Federal Government
station may accept payment in advance or in-kind
reimbursement of costs, or a combination of payment in
advance and in-kind reimbursement, from any person to
defray entirely the expenses of relocating the Federal
entity's operations from one or more radio spectrum
frequencies to another frequency or frequencies,
including, without limitation, the costs of any
modification, replacement, ore reissuance of equipment,
facilities, operating manuals, regulations, or other
expenses incurred by that entity. Any such payment
shall be deposited in the account of such Federal
entity in the Treasury of the United States. Funds
deposited according to this paragraph shall be
available, without appropriation or fiscal year
limitation, only for the operations of the Federal
entity for which such funds were deposited under this
paragraph.
``(2) Process for relocation.--Any person seeking to
relocate a Federal Government station that has been
assigned a frequency within a band allocated for mixed
Federal and non-Federal use may submit a petition for
such relocation to NTIA. The NTIA shall limit or
terminate the Federal Government station's operating
license when the following requirements are met:
``(A) the person seeking relocation of the
Federal Government station has guaranteed to
defray entirely, through payment in advance,
in-kind reimbursement of costs, or a
combination thereof, all relocation costs
incurred by the Federal entity, including all
engineering, equipment, site acquisition and
construction, and regulatory fee costs;
``(B) the person seeking relocation completes
all activities necessary for implementing the
relocation, including construction of
replacement facilities (if necessary and
appropriate) and identifying and obtaining on
the Federal entity's behalf new frequencies for
use by the relocated Federal Government station
(where such station is not relocating to
spectrum reserved exclusively for Federal use);
``(C) any necessary replacement facilities,
equipment modifications, or other changes have
been implemented and tested to ensure that the
Federal Government station is able to
successfully accomplish its purposes; and
``(D) NTIA has determined that the proposed
use of the spectrum frequency band to which the
Federal entity will relocate its operations
is--
``(i) consistent with obligations
undertaken by the United States in
international agreements and with
United States national security and
public safety interests; and
``(ii) suitable for the technical
characteristics of the band and
consistent with other uses of the band.
In exercising its authority under subparagraph
(d)(i), NTIA shall consult with the Secretary
of Defense, the Secretary of State, or other
appropriate officers of the Federal Government.
``(3) Right to reclaim.--If within one year after the
relocation the Federal Government station demonstrates
to the Commission that the new facilities or spectrum
are not comparable to the facilities or spectrum from
which the Federal Government station was relocated, the
person seeking such relocation must take reasonable
steps to remedy any defects or pay the Federal entity
for the costs of returning the Federal Government
station to the spectrum from which such station was
relocated.
``(h) Federal Action To Expedite Spectrum Transfer.--Any
Federal Government station which operates on electromagnetic
spectrum that has been identified for reallocation for mixed
Federal and non-Federal use in any reallocation report under
subsection (a) shall, to the maximum extent practicable through
the use of the authority granted under subsection (g) and any
other applicable provision of law, take action to relocate its
spectrum use to other frequencies that are reserved for Federal
use or to consolidate its spectrum use with other Federal
Government stations in a manner that maximizes the spectrum
available for non-Federal use. Subsection (c)(4) of this
section shall not apply to the extent that a non-Federal user
seeks to relocate or relocates a Federal power agency under
subsection (g).
``(i) Definition.--For purposes of this section, the term
`Federal entity' means any department, agency, or other
instrumentality of the Federal Government that utilizes a
Government station license obtained under section 305 of the
1934 Act (47 U.S.C. 305).''; and
(2) in section 114(a)(1), by striking ``(a) or
(d)(1)'' and inserting ``(a), (d)(1), or (f)''.
(d) Identification and Reallocation of Auctionable
Frequencies.--The National Telecommunications and Information
Administration Organization Act (47 U.S.C. 901 et seq.) is
amended--
(1) in section 113(b)--
(A) by striking the heading of paragraph (1)
and inserting ``Initial reallocation report.--
'';
(B) by inserting ``in the first report
required by subsection (a)'' after ``recommend
for reallocation'' in paragraph (1);
(C) by inserting ``or (3)'' after ``paragraph
(1)'' each place it appears in paragraph (2);
and
(D) by inserting after paragraph (2) the
following new paragraph:
``(3) Second reallocation report.--In accordance with
the provisions of this section, the Secretary shall
recommend for reallocation in the second report
required by subsection (a), for use other than by
Federal Government stations under section 305 of the
1934 Act (47 U.S.C. 305), a single frequency band that
spans not less than an additional 20 megahertz, that is
located below 3 gigahertz, and that meets the criteria
specified in paragraphs (1) through (5) of subsection
(a).''; and
(2) in section 115--
(A) in subsection (b), by striking ``the
report required by section 113(a)'' and
inserting ``the initial reallocation report
required by section 113(a)''; and
(B) by adding at the end the following new
subsection:
``(c) Allocation and Assignment of Frequencies Identified
in the Second Reallocation Report.--With respect to the
frequencies made available for reallocation pursuant to section
113(b)(3), the Commission shall, not later than 1 year after
receipt of the second reallocation report required by such
section, prepare, submit to the President and the Congress, and
implement, a plan for the allocation and assignment under the
1934 Act of such frequencies. Such plan shall propose the
immediate allocation and assignment of all such frequencies in
accordance with section 309(j) of the 1934 Act (47 U.S.C.
309(j).''.
SEC. 3002. AUCTION OF RECAPTURED ANALOG LICENSES.
(a) Analog Spectrum Reversion.--
(1) Limitations on terms of analog television
licenses (``reversion date'').--No analog television
license may be renewed for a period that extends beyond
the earlier of December 31, 2005 or one year after the
date the Commission finds, based on annual surveys
conducted pursuant to paragraph (2), that at least 95%
of households in the United States have the capability
to receive and display television signals, other than
television signals transmitted pursuant to an analog
television license. Following such date, only advanced
television licenses shall be issued.
(2) Annual survey.--The Department of Commerce shall,
each calendar year from 1998 to 2005, conduct a survey
to estimate the percentage of households in the United
States that have the capability to receive and display
television signals other than signals transmitted
pursuant to an analog television license.
(3) Spectrum reversion.--(A) The Commission shall
ensure that, as analog television licenses expire
pursuant to paragraph (a)(1), spectrum previously used
for the broadcast of analog television is reclaimed and
organized in such manner as to maximize the deployment
of new and existing services.
(B) Licensees for new services shall be selected by
competitive bidding. The FCC shall complete the
competitive bidding procedure by March 1, 2002.
(4) Minimum service obligation.--(A) The Commission,
by regulation, shall establish procedures to ensure
that, within the year prior to the reversion date
defined in paragraph (1), the advanced television
licensees shall provide each household without the
capability to receive and display television signals
other than television signals transmitted pursuant to
an analog television license, if such household
requests, with the capability to receive and display
advanced television service.
(B) Each advanced television service licensee shall
provide, each day for the duration of its license, at
least one non-subscription television service that
meets or exceeds minimum technical and other standards
established by the Commission as well as any other
regulations pursuant to the Communications Act of 1934,
as amended, and the Children's Television Act of 1990.
In setting these minimum technical standards, the
Commission shall, to the extent technically feasible,
ensure that picture and audio quality are at least as
good as provided to recipients under current Commission
rules for National Television Systems Committee (NTSC)
signals and shall adopt such technical and other
requirements as may be necessary or appropriate to
assure the quality of the signal used to provide
advanced television services, including regulations
that set the minimum number of hours per day that such
signal must be transmitted. The Commission shall revoke
the license of any advanced television licensee who
fails to meet this condition of the license. The
Commission shall promulgate regulations to assure the
dissemination of converter boxes or devices necessary
to ensure access to digital TV to all households that
desire this access at a reasonable cost. The Commission
in these regulations shall--
(A) ensure that consumers receive only one
such rebate per household; and
(B) implement a mechanism by which
responsibility for cost sharing can be
equitably allocated. To the extent possible,
the digital converter boxes distributed in
accordance with this section shall utilize an
affordable technology to process digital
signals for reception on analog television
sets.
(5) Public interest obligation.--Nothing in this
section shall be construed as relieving an advanced
television licensee from its obligation to serve the
public interest, convenience, and necessity.
(b) Definitions.--As used in this section--
(1) the term ``advanced television services'' means
television services provided using digital or other
advanced technology to enhance audio quality and video
resolution, as further defined in the Opinion, Report,
and Order of the Commission entitled ``Advanced
Television Systems and Their Impact Upon the Existing
Television Service,'' MM Docket No. 87-268; and
(2) the term ``analog television licenses'' means
licenses issued pursuant to CFR 73.682 et seq. and in
effect November 13, 1995.
TITLE III--MEDICAID
SEC. 11300. TABLE OF CONTENTS OF SUBTITLE.
The table of contents of this subtitle is as follows:
TITLE III--MEDICAID
Sec. 11300. Table of contents of subtitle.
Part 1--Federal Payments
Sec. 11301. Limitations on per beneficiary rate of growth in Federal
financial participation.
Sec. 11302. Reduction of disproportionate share payments.
Sec. 11303. Medicaid eligibility quality control (MEQC) requirements.
Part 2--Eligibility
Sec. 11311. Extension of coverage to additional individuals, subject to
poverty-related or caseload limits.
Sec. 11312. Elimination of authority for new eligibility expansion
demonstrations.
Sec. 11313. Upper income limit on ``less restrictive'' eligibility
methodologies.
Part 3--Managed Care
Sec. 11321. Primary care case management services as State option
without need for wavier.
Sec. 11322. State options to restrict choice of providers.
Sec. 11323. Elimination of restrictions on risk contracts.
Sec. 11324. 6-month guaranteed eligibility for all individuals enrolled
in managed care.
Sec. 11325. Requirements to ensure quality of and access to care under
managed care plans.
Part 4--Benefits
Sec. 11331. Home- and community-based services as State option without
need for waiver.
Sec. 11332. Elimination of requirement to pay for private insurance.
Sec. 11333. Benefits for individuals covered during transition to work.
Part 5--Provider Participation and Payment Rates
Sec. 11341. Methods for establishing provider payment rates.
Sec. 11343. Elimination of obstetrical and pediatric payment rate
requirements.
Part 6--State Plan Administration
Sec. 11351. MMIS requirements.
Sec. 11352. Elimination of personnel requirements.
Sec. 11353. Elimination of requirements for cooperative agreements with
health agencies.
Sec. 11355. State review of mentally ill or retarded nursing facility
residents upon change in physical or mental condition.
Sec. 11356. Nurse aide training in Medicare and Medicaid nursing
facilities subject to extended survey and under certain other
conditions.
Sec. 11357. Combined State plan submission.
Sec. 11358. Public Process for developing State plan amendments.
Part 7--Effective Date
Sec. 11361. Effective date.
PART 1--FEDERAL PAYMENTS
SEC. 201. LIMITATION ON AVERAGE PER BENEFICIARY RATE OF GROWTH IN
FEDERAL FINANCIAL PARTICIPATION.
(a) In General.--Title XIX of the Social Security Act is
amended--
(1) by redesignating section 1931 as section 1932,
and
(2) by inserting after section 1930 the following new
section:
``LIMITATION ON FEDERAL FINANCIAL PARTICIPATION BASED ON AVERAGE PER
BENEFICIARY EXPENDITURES
``Sec. 1931. (a) Aggregate Limit.--
``(1) In general.--Subject to the succeeding
provisions of this section, the total amount of
payments in grant awards to a State under section
1903(a) for the 4 quarters in each of fiscal years 1997
through 2002 shall not exceed the sum of the limits,
specified under paragraph (2), for each group of
medicaid enrollees (as defined in subsection (b)(1))
for the State for the fiscal year. Such payment limit
shall be based on the total net matchable medicaid
expenditures for the State for the fiscal year as
defined and specified under subsection (c)(4).
``(2) Group limits.--The limit under this paragraph
for a group of medicaid enrollees for a State for a
fiscal year is the product of the following factors:
``(A) The average per enrollee matchable
expenditure limit for the group for the State
for the fiscal year (determined under
subsection (c)(1)).
``(B) The number of full-time equivalent
individuals in the group in the State in the
fiscal year (determined under subsection (d)).
``(C) The Federal medical assistance
percentage for the State for the fiscal year
(as defined in section 1905(b)).
``(3) Exception for portion of medical assistance
provided under approved waivers.--
``(A) In general.--In the case of a State
which provides medical assistance under its
State plan under this title pursuant to a
waiver granted under section 1115 (as of [date
of introduction of proposal]) on a Statewide
basis (or under such a waiver that covers a
substate area with a population of at least 9
million), the Secretary shall provide for an
adjustment in the application of this section
so that--
``(i) the limitation on total
payments under paragraph (1) does not
apply to Federal financial
participation attributable to the
medical assistance (and related
administrative expenditures) provided
under such a waiver; and
``(ii) the average per enrollee
matchable expenditure limit established
under subsection (c) and applicable to
a group of medicaid enrollees is equal
to such limit multiplied by the
nonwaiver proportion (as defined in
subparagraph (B)) for that group.
``(B) Nonwaiver proportion.--In subparagraph
(A)(ii), the `nonwaiver proportion' for a group
of medicaid enrollees for a State for a fiscal
year is the ratio of--
``(i) the amount of the Federal
financial participation that the
Secretary estimates would have been
expended (in the absence of this
section) for medical assistance (and
related administrative expenditures)
for the group for the State for the
fiscal year for items and services not
covered under the waiver, to
``(ii) the total amount of the
Federal financial participation that
the Secretary estimates would have been
expended (in the absence of this
section) for medical assistance (and
related administrative expenditures)
for the group for the State for the
fiscal year (whether or not covered
under the waiver).
``(4) No application to vaccine program.--Nothing in
this section shall be construed as applying any
limitation to payments for the purchase and delivery of
qualified pediatric vaccines under section 1928.
``(b) Definitions Relating to Groups of Medicaid
Enrollees.--In this section:
``(1) In general.--Each of the following shall be
considered a separate `group of medicaid enrollees':
``(A) Nondisabled medicaid children.
``(B) Nondisabled medicaid adults.
``(C) Elderly medicaid beneficiaries.
``(D) Disabled medicaid beneficiaries.
``(2) Nondisabled medicaid children.--The term
`nondisabled medicaid child' means a medicaid enrollee
who--
``(A) is under 21 years of age,
``(B) is not the custodial parent of a child,
and
``(C) is not a disabled medicaid beneficiary.
``(3) Nondisabled medicaid adults.--The term
`nondisabled medicaid adult' means a medicaid enrollee
who--
``(A) is under 65 years of age,
``(B) is not a disabled medicaid beneficiary,
and
``(C)(i) is at least 21 years of age or (ii)
is the custodial parent of a child.
``(4) Elderly medicaid beneficiary.--The term
`elderly medicaid beneficiary' means a medicaid
enrollee who is at least 65 years of age.
``(5) Disabled medicaid beneficiaries.--The term
`disabled medicaid beneficiary' means a medicaid
enrollee who--
``(A) is under 65 years of age, and
``(B) has been determined to meet the
standards for being blind or disabled under the
supplemental income security program under
title XVI.
``(6) Medicaid enrollee.--The term `medicaid
enrollee' means, with respect to a State medical
assistance program under this title, an individual who
is enrolled with such program, but does not include an
individual who is eligible only for medicare cost-
sharing benefits under the program as--
``(A) a qualified medicare beneficiary (as
defined in section 1905(p)(1)),
``(B) a qualified disabled and working
individual (as defined in section 1905(s)), or
``(C) an individual described in section
1902(a)(10)(E)(iii).
``(c) Average Per Enrollee Matchable Expenditure Limit;
Total Net Matchable Medicaid Expenditures Defined.--
``(1) In general.--For purposes of this section, the
average `per enrollee matchable expenditure limit', for
a group of medicaid enrollees for a State--
``(A) for fiscal year 1997 is equal to the
average base per enrollee amount (as defined
under paragraph (2)(A)) for the group for the
State multiplied by the allowable growth
multiplier (under paragraph (3)) for each of
fiscal years 1996 and 1997; and
``(B) for a succeeding fiscal year is equal
to the per enrollee matchable expenditure limit
under this paragraph for the preceding fiscal
year multiplied by the allowable growth
multiplier for that succeeding fiscal year.
Before the beginning of each of fiscal years 1997
through 2002, the Secretary shall determine and publish
each State's average per enrollee matchable expenditure
limit under this paragraph for each group of medicaid
enrollees.
``(2) Base per enrollee amount.--
``(A) In general.--In this section, the `base
average per enrollee amount', for a group of
medicaid enrollees for a State, is equal to--
``(i) the sum of (i) the base medical
assistance amount (determined under
subparagraph (C)) for the group and
State, and (ii) the base administrative
cost amount (determined under
subparagraph (D)) for group and the
State; divided by
``(ii) the number of full-year
equivalent medicaid enrollees in the
group in the State in fiscal year 1995
(as determined pursuant to subsection
(d)).
``(B) Determination of net matchable medicaid
expenditures for fiscal year 1995.--In order to
determine base average per enrollee amounts for
a State, the Secretary shall--
``(i) determine the amount of the
total net matchable medicaid
expenditures (as defined in paragraph
(4)) for the State for fiscal year
1995, and
``(ii) separately identify--
``(I) the portion of such
amount attributable to medical
assistance, and
``(II) the portion of such
amount attributable to
administrative costs.
The Secretary shall base the determination
under clause (i) on the expenditures reported
by the State on line 11 of HCFA Form 64 for the
4 quarters of fiscal year 1995, subject to the
adjustments described in paragraph (4)(B)).
``(C) Base medical assistance amount for each
group.--For each State for each group of
medicaid enrollees, the Secretary shall
determine a `base medical assistance amount'
equal to the amount, of the portion of the
total net matchable medicaid expenditures for
fiscal year 1995 for the State attributed to
medical assistance under subparagraph
(B)(ii)(I), that the Secretary finds is
attributable to items and services furnished to
individuals in such group for the State .
``(D) Base administrative cost amount for
each group.--For each State for each group of
medicaid enrollees, the Secretary shall
determine a `base administrative cost amount'
equal to the amount that bears the same ratio
to the portion of the total net matchable
medicaid expenditures for fiscal year 1995 for
the State attributed to administrative costs
under subparagraph (B)(ii)(II) as the base
medical assistance amount for the group (as
determined under subparagraph (C) for the
State) bears to the sum of the base medical
assistance amounts for all the groups for the
State.
``(3) Allowable growth multiplier.--In this
subsection, the `allowable growth multiplier' for--
``(A) fiscal year 1996 is 6.5 percent.
``(B) fiscal year 1997 is 6.5 percent.
``(C) fiscal year 1998 is 6.5 percent.
``(D) fiscal year 1999 is 6.0 percent.
``(E) fiscal year 2000 is 5.5 percent.
``(F) fiscal year 2001 is 5.0 percent.
``(G) fiscal year 2002 is 4.5 percent.
``(4) Equity adjustor in allowable growth multiplier
for states with low per capita expenditures.--
``(A) Fiscal year 1997.--If the [per
beneficiary base amount described in paragraph
( ) for the base fiscal year] for a State for
a [group of medicare enrollees]--
``(i) does not exceed 80 percent of
the national, weighted average of such
[per beneficiary base amounts] for such
group for all States for the year,
then, the determining the per
beneficiary limit for such State and
group for fiscal year 1997, the
allowable growth multiplier for each of
fiscal years 1996 and 1997 shall be
increased by 2.0 percentage points;
``(ii) exceeds 80 percent, but does
not exceed 90 percent, of such
national, weighted average, then, in
determining the per beneficiary limit
for such State and group for fiscal
year 1997, the allowable growth
multiplier for each of fiscal years
* * * * * * *
``(4) Total net matchable medicaid expenditures.--
``(A) In general.--In this section, the term
`total net matchable medicaid expenditures'
means, for a State for a fiscal year, the total
net expenditures for the State under this title
for the 4 quarters of the fiscal year for which
payments may be made under section 1903,
reduced by the amount of such expenditures that
the Secretary determines is attributable to
expenditures described in subsection (e).
``(B) Use of forms and adjustment.--The total
net matchable medicaid expenditures for a State
for a fiscal year shall be determined by the
Secretary based on reports submitted by the
State under section 1903 for quarters in the
fiscal year and as adjusted by the Secretary by
January 31 of the succeeding fiscal year to
take into account disallowances and similar
adjustments for expenditures not described in
subsection (e).
``(d) Determination of Number of Full-Year Equivalent
Individuals.--
``(1) In general.--For purposes of this section, the
number of full-year equivalent individuals in each
group of medicaid enrollees for a State for a fiscal
year shall be determined, subject to paragraphs (2) and
(3), based on reports submitted by the State of the
Secretary.
``(2) Part-year enrollees.--In the case of
individuals who were not a medicaid enrollee for the
entire fiscal year (or are within a group of medicaid
enrollees for only part of a fiscal year), the number
shall take into account only the portion of the year in
which they were such enrollees or within such group.
``(3) Secretarial oversight.--In order to ensure the
accuracy of the numbers reported by States under this
subsection, the Secretary is authorized--
``(A) to require documentation, whether on a
sample or other basis,
``(B) to audit such reports (or to require
the performance of independent audits), and
``(C) to revise the numbers so reported.
``(e) Expenditures Not Subject to (or Counted in)
Limitation.--For purposes of this section, the following
expenditures (for which payments may be made to a State under
section 1903(a)) shall not be counted in computing base medical
assistance amounts or base administrative cost amounts under
subsection (c)(2) and Federal financial participation with
respect to such expenditures shall not be subject to the limit
established under subsection (a)(1):
``(1) Disproportionate share payment adjustments.--
Expenditures attributable to payment adjustments made
under section 1923.
``(2) Medicare cost-sharing.--Expenditures for
medical assistance for medicare cost-sharing, as
defined in section 1905(p)(3).
``(3) Indian health programs.--Expenditures for
medical assistance for services provided by--
``(A) the Indian Health Service,
``(B) an Indian health program operated by an
Indian tribe or tribal organization pursuant to
a contract, grant, cooperative agreement, or
compact with the Indian Health Service pursuant
to the Indian Self-Determination Act (25 U.S.C.
450 et seq.), and
``(C) an urban Indian health program operated
by an urban Indian organization pursuant to a
grant or contract with the Indian Health
Service pursuant to title V of the Indian
Health Care Improvement Act (25 U.S.C. 1601 et
seq.).
``(4) Information systems.--Expenditures described in
subparagraph (A)(i) and (B) of section 1903(a)(2).
``(5) Nursing facility preadmission screening,
resident review, and survey and certification
activities.--Expenditures described in subparagraphs
(C) and (D) of section 1903(a)(2).
``(6) SAVE.--Expenditures attributable to
implementation of the immigration status verification
system (described in section 1137(d)) pursuant to
section 1903(a)(4).
``(7) Fraud and abuse activities.--Expenditures for
activities of State medicaid fraud control units
pursuant to section 1903(a)(6).''.
(b) Enforcement-Related Provisions.--
(1) Assuring actual payments to states consistent
with limitation.--Section 1903(d) of such Act (42
U.S.C. 1396(d)) is amended--
(A) in paragraph (2)(A), by striking ``The
Secretary'' and inserting ``Subject to
paragraph (7), the Secretary'', and
(B) by adding at the end the following new
paragraph:
``(7)(A) The Secretary shall take such steps as are
necessary to assure that payments under this subsection for
quarters in a fiscal year (and for the entire fiscal year) are
consistent with the limitation established under section 1931
for the fiscal year. Such steps may include limiting such
payments for one or more quarters in a fiscal year based on--
``(i) an appropriate proportion of the limitation
under section 1931(a) for the fiscal year involved, and
``(ii) numbers of individuals within each group of
medicaid enrollees, as reported under subparagraph (B)
for a recent previous quarter.
``(B) Each State shall include, in its report filed under
paragraph (1)(A) for a calendar quarter--
``(i) the actual number of individuals within each
group of medicaid enrollees described in section
1931(b)(1) for the second previous calendar quarter and
(based on the data available) for the previous calendar
quarter, and
``(ii) an estimate of such numbers for the calendar
quarter involved.
as well as expenditures (other than expenditures described in
section 1931(e)) attributable to each such group for such
periods.
``(C) In order to implement section 1931 and this
subsection, the Secretary shall--
``(i) change HCFA Form 37 to require States to
separate out spending projections by groups of medicaid
enrollees, and
``(ii) change HCFA Form 64 to include enrollment data
and to permit the attribution of expenditures to such
groups.
The Secretary shall provide for the auditing of information
reported under clause (ii).
``(D) The Secretary shall take such actions as may be
necessary to assure the accuracy of the base per enrollee
amounts determined under section 1931(c)(2).''.
(2) Upper income limit on ``less restrictive''
eligibility methodologies.--Section 1902(r)(2) of such
Act (42 U.S.C. 1396a(r)(2)) is amended--
(A) in subparagraph (A), by inserting
``(except as provided in subparagraph (C))''
after ``no more restrictive'', and
(B) by adding at the end the following new
subparagraph:
``(C) The methodology described in subparagraph (A) shall
not result in an income eligibility limit (based on gross
income) that is greater than the greater of--
``(i) 150 percent of the poverty line (as defined in
section 673(2) of the Community Services Block Grant
Act (42 U.S.C. 9902(2)), including any revision
required by such section), or
``(ii) the income eligibility limit applicable under
the State plan in effect in fiscal year 1995 (taking
into account any such limit applicable under a waiver
under section 1115).''.
(c) Application of Enhanced Matching Rate for Development
of Information Systems.--Section 1903(a)(3)(A)(i) of such Act
(42 U.S.C. 1396b(a)(3)(A)(i)) is amended by inserting before
the comma at the end the following: ``and including information
systems necessary to assure compliance with reporting
requirements identified as necessary to carry out section
______ of the [Omnibus Budget Reconciliation Act of 1995]''.
(d) Conforming Amendment.--Section 1903(a) of such Act (42
U.S.C. 1396b(a)), in the matter preceding paragraph (1), is
amended by inserting ``or section 1931'' after ``except as
otherwise provided in this section''.
(e) Conforming Amendments.--
(1) Section 1903(a) is amended in the matter
preceding paragraph (1) by inserting ``or section
1931'' after ``except as otherwise provided in the
section''.
(2) Section 1903 is amended by adding after
subsection (w) the following new subsections:
``(x) Notwithstanding any other provision of this Act, no
State shall be entitled to payment under this title--
``(1) with respect to expenditures after September
30, 1996, that exceed the limitation on Federal
financial participation specified in section 1931; or
``(2) with respect to an expenditure made or other
obligation incurred by a State before October 1, 1996,
unless the State has submitted to the Secretary, not
later than June 30, 1997, a claim for Federal financial
participation in such expenditure or obligation.''.
TITLE IV--MEDICARE SAVINGS
(b) Amendments to Social Security Act.--Except as otherwise
specifically provided, whenever in this title an amendment is
expressed in terms of an amendment to or repeal of a section or
other provision, the reference is considered to be made to that
section or other provision of the Social Security Act.
PART 1--PROVISIONS RELATING TO PART A
SEC. 11101. UPDATES FOR PPS HOSPITALS.
(a) Update Factors.--Section 1886(b)(3)(B)(i) (42 U.S.C.
1395ww(b)(3)(B)(i)) is amended by striking subclauses (XII) and
(XIII) and inserting the following:
``(XII) for each of the fiscal years 1997 through
2000, the market basket percentage increase minus 1.0
percentage points for hospitals in all areas,
``(XIII) for fiscal years 2001 and 2002, the market
basket percentage increase minus 1.5 percentage points
for hospitals in all areas, and
``(XIV) for fiscal year 2003 and each subsequent
fiscal year, the market basket percentage increase for
hospitals in all areas.''.
(b) Adjustments for Case Mix When Recalibrating DRGS.--
(1) In general.--Section 1886(d)(3) (42 U.S.C.
1395ww(d)(3)) is amended by adding at the end the
following:
``(F) Adjusting for estimated change in case mix.--
``(i) In general.--Effective for discharges
occurring in a fiscal year in which the
Secretary implements significant changes (as
defined by the Secretary) in the diagnosis-
related group classification system and
thereafter, the Secretary may (subject to
clause (ii)) adjust the standardized amounts to
take into account estimated case mix increase
not attributable to real case mix increase
anticipated to occur during the fiscal year to
which the standardized amounts apply.
``(ii) Refinement.--With regard to the
adjustment described in clause (i), if the
Secretary determines, based on data taken from
the fiscal year to which the adjustment
applied, that the amount of the adjustment
varied from the actual amount of case mix
increase not attributable to real case mix
increase by more than 0.25 percentage points,
the Secretary shall make a prospective
adjustment to the standardized amounts to
correct for the variance.''.
(2) PROPAC recommendations.--Section 1886(e)(2)(A)
(42 U.S.C. 1395ww(e)(2)(A)) is amended by adding at the
end the following: ``With respect to subsection (d)
hospitals, the Commission's recommendation regarding
the appropriate percentage change shall take into
account the anticipated difference during the fiscal
year between the change in the average weighting factor
and the change in real case mix.''.
SEC. 11102. MAINTAINING SAVINGS FROM TEMPORARY REDUCTION IN PPS CAPITAL
RATES.
Section 1886(g)(1)(A) (42 U.S.C. 1395ww(g)(1)(A)) is
amended by adding at the end the following: ``In addition to
the reduction described in the preceding sentence, for
discharges occurring after September 30, 1995, the Secretary
shall reduce by 15.7 percent the unadjusted standard Federal
capital payment rate (as described in section 412.308(c) of
volume 42 of the Code of Federal Regulations), as in effect on
September 30, 1995) and shall reduce by 15.7 percent the
unadjusted hospital-specific rate (as described in section
412.328(e)(1) of volume 42 of the Code of Federal Regulations),
as in effect on September 30, 1995).''.
SEC. 11103. REDUCTIONS IN DISPROPORTIONATE SHARE PAYMENT ADJUSTMENTS.
(a) In General.--Section 1886(d)(5)(F) (42 U.S.C.
1395ww(d)(5)(F)) is amended--
(1) in clause (ii), by striking ``The amount'' and
inserting ``Subject to clause (ix), the amount'', and
(2) by adding at the end the following:
``(ix) Fiscal year 1999 and later.--For
discharges occurring on or after October 1,
1998, the payment amount otherwise determined
under clause (ii) shall be reduced by 10
percent.''.
(b) Conforming Amendment Relating to Determination of
Standardized Amounts.--Section 1886(d)(2)(C)(iv) (42 U.S.C.
1395ww(d)(2)(C)(iv)) is amended inserting the following before
the period: ``, and the Secretary shall not take into account
any reductions in the amount of such additional payments
resulting from the amendments made by section 11103(a) of the
Balanced Budget Act of 1995 for Economic Growth and Fairness''.
SEC. 11104. REDUCTION IN ADJUSTMENT FOR INDIRECT MEDICAL EDUCATION.
(a) In General.--Section 1886(d)(5)(B)(ii) (42 U.S.C.
1395ww(d)(5)(B)(ii)) is amended by striking all after
``occurring'' and inserting the following: ``the indirect
teaching adjustment factor for discharges occurring--
``(I) on or after January 1, 1996, and before
October 1, 1996, is equal to 1.77 x (((1+r)
to the nth power) - 1),
``(II) during fiscal years 1997 through 1999,
is equal to 1.67 x (((1+r) to the nth power)
- 1),
``(III) during the fiscal year 2000, is equal
to 1.55 x (((1+r) to nth power) - 1), and
``(IV) during the fiscal years beginning with
2001, is equal to 1.47 x (((1+r) to the nth
power) - 1),
where `r' is the ratio of the hospital's full-time
equivalent interns and residents to beds in `n' equals
.405.''.
(b) Conforming Amendment Relating to Determination of
Standardized Amounts.--Section 1886(d)(2)(C)(i) (42 U.S.C.
1395ww(d)(2)(C)(i)) is amended by adding at the end the
following: ``, except that the Secretary shall not take into
account any reductions in the amount of additional payments
under subsection (d)(5)(B)(ii) resulting from the amendments
made by section 11104(a) of the Balanced Budget Act of 1995 for
Economic Growth and Fairness,''.
(c) Alternative to Restandardization of Costs.--Section
1886(d)(3)(A) (42 U.S.C. 1395ww(d)(3)(A)) is amended by adding
at the end the following:
``(vi) Alternative to
restandardization of costs.--
Notwithstanding clauses (i) through
(v), if changes in the amount of
payment under subsections (d)(3)(E),
(d)(5)(B), or (d)(5)(F) would otherwise
require the Secretary top restandardize
hospital costs under subsection
(d)(2)(C), the Secretary may compute
payments amounts under the subparagraph
in a manner that assures the aggregate
payments under this subsection in a
fiscal year not greater or less than
those that would have been made in the
year if the Secretary had
restandardized hospital costs under
subsection (d)(2)(C).''.
(d) Effective Date.--The amendments made by the previous
subsections apply to discharges occurring after 1995.
SEC. 11105. REVISIONS IN DETERMINATION OF AMOUNT OF PAYMENT FOR MEDICAL
EDUCATION.
(a) Indirect Medical Education.--
(1) In general.--Section 1886(d)(5)(B) (42 U.S.C.
1395ww(d)(5)(B)) is amended--
(A) in clause (ii) (as amended by section
111104(a) of the Act), by inserting before the
period '', subject to clause (vii)'', and
(B) by adding at the end the following:
``(v) Limitations on numbers of interns and
residents.--In determining such adjustment with respect
to a hospital for discharges occurring on or after
October 1, 1995--
``(I) except as provided in clause (vi), the
total number of interns and residents may not
exceed the number of interns and residents with
respect to the hospital's cost reporting period
ending on or before December 31, 1995, and
``(II) except as provided in subclause (vi),
the number of interns and residents who are not
who are not primary care residents as defined
in section 1886 (h)(5)(H) or residents in
obstetrics and gynecology, may not exceed the
number of such residents as of such cost
reporting period.
``(vi) Adjustments to limits.--The Secretary shall
adjust the number of interns and residents in clause
(v)--
``(I) by applying a weighting factor of 0.50
with respect to each intern or resident who was
not in an initial residency period as defined
in Section 1886(h)(5)(F),
``(II) by including any interns and residents
that qualify under clause (iv), and
``(III) as appropriate, where a hospital has
a significant increase in the number of primary
care or obstetrics and gynecology interns and
residents after June 30, 1995.
``(vii) Limitation on resident-to-bed ratio.--For
purposes of clause (ii), `r' may not exceed the ratio
of the number of interns and residents as determined
under clause (v) with respect to the hospital for its
most recent cost reporting period ending on or before
December 31, 1995, to the hospital's available beds (as
defined by the Secretary) during such cost reporting
period.''.
(2) Payment for interns and residents providing off-
site services.--Section 1886(d)(5)(B)(iv) (U.S.C. 42
1395ww(d)(5)(B)(iv) is amended to read as follows:
``(iv) Off-site services.--All the
time spent by an intern or resident in
patient care activities under an
approved medical residency training
program shall be counted towards the
determination of full-time equivalency
at an entity in a non-hospital setting,
if the hospital incurs all, or
substantially all, of the costs for the
training program in that setting.''.
(b) Direct Medical Education.--
(1) Limitation of number of residents.--Section
1886(h)(4) (42 U.S.C. 1395ww(h)(4)) is amended by
adding at the end the following:
``(F) Limitation of number of residents for
certain fiscal years.--Such rules shall provide
that for purposes of a cost reporting period
beginning on or after October 1, 1995--
``(i) the total number of full-time
equivalent residents (as determined
under this paragraph) with respect to
an approved medical residency training
program may not exceed the number of
full-time equivalent residents with
respect to the ending on or before
December 31, 1995, and
``(ii) the number of a hospital's
full-time-equivalent residents as
determined under this paragraph who are
not primary care residents (as defined
in paragraph (5)(H)) or residents in
obstetrics and gynecology may not
exceed the number of such residents as
of such cost reporting period.
``(G) Adjustments to limitations.--The
Secretary may adjust the limitations specified
in subparagraph (F) if a hospital has a
significant increase in the number of primary
care or obstetrics and gynecology interns or
residents after June 30, 1995.''.
(2) Continuation of freeze on updates to fte resident
amounts.--Section 1886(h)(2)(D)(ii) (42 U.S.C.
1395ww(h)(2)(D)(ii)) is amended by striking ``fiscal
year 1994 or fiscal year 1995'' and inserting ``fiscal
years 1994 through 2000''.
(3) Permitting payment to non-hospital providers.--
Section 1886 (42 U.S.C. 1395ww)) is amended by adding
at the end the following:
``(j) Payment to Non-Hospital Providers.--Beginning with
cost reporting periods beginning on or after July 1, 1996, the
Secretary may make payments (in such amounts and in such form,
and from each of the trust funds under this title, as the
Secretary considers appropriate) to Federally Qualified Health
Centers (as defined in section 1861(aa)(4)) and Rural Health
Clinics (as defined in section 1861(aa)(2)) and eligible
organizations with contracts under part C for the direct costs
of medical education, if such costs are incurred in the
operation of an approved medical residence training program
described in subsection (h). The Secretary may designate
additional entities as eligible organizations for such payments
as the Secretary determines to be appropriate.''.
(c) Application to Cost Contracts.--Section 1886(j) of the
Social Security Act (42 U.S.C. 1395ww(j)) (as added by
subsection (b)(3) of this section) applies to contracts under
section 1876(h) of that Act (42 U.S.C. 1395mm).
(d) Effective Date.--The amendments made by the previous
subsections apply to hospital cost reporting periods beginning
on or after October 1, 1995.
(e) Commission on Medical Education and Workforce
Priorities.--
(1) In general.--There is established within the
Department of Health and Human Services a Commission to
be known as the National Commission on Medical
Education and Workforce Priorities (hereafter in this
subsection referred to as the ``Commission'').
(2) Duties.--The Commission shall have the following
responsibilities:
(A) To develop and recommend to the Secretary
specific policies to address the preservation
of the research and educational capacity of the
Nation's academic health centers and the
supply, composition, and support of the future
health care workforce. The Commission shall
examine--
(i) the financing of graduate medical
education,
(ii) issues relating to children's
and specialty hospitals,
(iii) policies regarding
international medical school graduates,
and
(iv) the relationship of graduate
medical education funding and service-
generated income.
(B) To make recommendations concerning the
most effective allocation of training resources
to ensure that the numbers and competencies of
health care professionals are responsive to the
Nation's needs.
(3) Composition.--
(A) Qualifications.--The Commission shall
consist of 15 members appointed by the
Secretary, and shall to the extent feasible
include--
(i) individuals nationally recognized
for expertise in health economics,
medical education financing, medical
practice, issues relating to the
composition of the health care
workforce, research on and development
of technological and scientific
advances in health care, and other
related fields; and
(ii) health care professionals
including physicians (both faculty and
non-faculty), consumers, a dean and a
chief executive officer or an academic
health center or a teaching hospital,
and representatives from health
insurance organizations, managed care
organizations, and medical workforce
accrediting organizations.
(B) National representation.--To the extent
feasible, the membership of the Commission--
(i) shall represent the various
geographic regions of the United
States,
(ii) shall reflect the racial,
ethnic, and gender composition of the
United States; and
(iii) shall be broadly representative
of medical schools, academic health
centers, teaching hospitals, and
schools involved in the training of
non-physician providers of health
services.
(4) Terms of office.--Members of the Commission shall
first be appointed no later than July 1, 1996, for a
term of two and one half years.
(5) Ex officio members.--In addition to the members
appointed pursuant to paragraph (3), the Commission
shall include--
(A) the Secretary of Health and Human
Services, the Secretary of Veterans Affairs,
and the Secretary of Defense (or a designee of
each such official); and
(B) such additional individuals as may be
designated by the Secretary from among Federal
officers or employees.
(6) Chair.--The Secretary shall designate an
individual from among the members appointed pursuant to
paragraph (3)(A) to serve as the chair of the
Commission.
(7) Quorum.--Nine members of the Commission shall
constitute a quorum, but a lesser number may hold
hearings.
(8) Vacancies.--Any vacancy in the Commission shall
not affect its power to function.
(9) Compensation.--Each member of the Commission who
is not otherwise employed by the United States
Government shall receive compensation at a rate equal
to the daily rate prescribed for GS-18 under the
General Schedule under section 5332 of title 5, United
States Code, for each day, including travel time, such
member is engaged in the actual performance of duties
as a member of the Commission. A member of the
Commission who is an officer or employee of the United
States Government shall serve without additional
compensation. All members of the Commission shall be
reimbursed for travel, subsistence, and other necessary
expenses incurred by them in the performance of their
duties.
(10) Certain authorities and duties.--In order to
carry out the provisions of this subsection, the
Commission is authorized to--
(A) collect such information, hold such
hearings, and sit and act at such times and
places, either as a whole or by subcommittee,
and request the attendance and testimony of
such witnesses and the production of such
documents as the Commission may consider
advisable; and
(B) request the cooperation and assistance of
Federal departments, agencies, and
instrumentalities, and such departments,
agencies, and instrumentalities are authorized
to provide such cooperation and assistance.
(11) Reports.--The Commission shall submit to the
Secretary a preliminary report not later than July 1,
1997, and a final report not later than July 1, 1998,
making recommendations on the matters specified in
paragraph (2).
(12) Termination.--The Commission shall terminate as
of December 31, 1998.
(13) Authorization of appropriations.--There is
authorized to be appropriated to the Secretary of
Health and Human Services for use in carrying out this
subsection not more than $250,000 for each of fiscal
years 1996, 1997, 1998. Funds appropriated for fiscal
year 1998 shall remain available until expended.
SEC. 11106. ELIMINATION OF IME AND DSH PAYMENTS ATTRIBUTABLE TO OUTLIER
PAYMENTS.
(a) Indirect Medical Education.--Section
1886(d)(5)(B)(i)(I) (42 U.S.C. 1395ww(d)(5)(B)(i)(I)) is
amended by inserting ``, for cases qualifying for additional
payment under subparagraph (A)(i),'' before ``the amount paid
to the hospital under subparagraph (A)''.
(b) Disproportionate Share Adjustments.--Section
1886(d)(5)(F)(ii)(I) (42 U.S.C. 1395ww(d)(5)(F)(ii)(I)) is
amended by inserting ``, for cases qualifying for additional
payment under subparagraph (A)(i),'' before ``the amount paid
to the hospital under subparagraph (A)''.
(c) Cost Outlier Payments.--Section 1886(d)(5)(A)(ii) (42
U.S.C. 1395ww(d)(5)(A)(ii)) is amended by striking ``exceed the
applicable DRG prospective payment rate'' and inserting
``exceed the sum of the applicable DRG prospective payment rate
plus any amounts payable under paragraphs (d)(5)(B) and
(d)(5)(F)''.
(d) Effective Date.--The amendments made by the previous
subsections apply to discharges occurring on or after October
1, 1995.
SEC. 11107. TREATMENT OF TRANSFER CASES.
Section 1886(d)(5)(I) (42 U.S.C. 1395ww(d)(5)(I)) of the
Act is amended by adding at the end the following:
``(iii) Certain transfers.--Effective for discharges
occurring on or after October 1, 1995, transfer cases (as
otherwise defined by the Secretary) shall also include cases in
which a patient is transferred from a subsection (d) hospital
to a hospital or hospital unit that is not a subsection (d)
hospital (under section 1886(d)(1)(B) and implementing
regulations) or to a skilled nursing facility for the purpose
of receiving extended care services.''.
SEC. 11108. MORATORIUM ON NEW LONG TERM CARE HOSPITAL EXCLUSIONS.
Section 1886(d)(1)(B)(iv) (42 U.S.C. 1395ww(d)(1)(B)(iv))
is amended by inserting ``(and had such an average on the date
of enactment of the Balanced Budget Act of 1995 for Economic
Growth and Fairness)'' before the comma.
SEC. 11109. PAYMENTS TO HOSPITALS EXCLUDED FROM PPS.
(a) Reductions in Updates.--Section 1886(b)(3)(B)(ii) (42
U.S.C. 1395ww(b)(4)(B)(ii)) is amended--
(1) in subclause (V)
(A) by striking ``through 1997'' and
inserting ``through 1995'', and
(B) by striking ``and'',
(2) by renumbering subclause (VI) as (VIII), and
(3) by inserting after subclause (V) the following:
``(VI) fiscal years 1996 through 2000, the market
basket percentage increase minus 1.0 percentage point,
``(VII) fiscal years 2001 and 2002, the market basket
percentage increase minus 1.5 percentage points, and''.
(b) Rebasing for PPS-Exempt Hospitals.--Section
1886(b)(3)(A) (42 U.S.C. 1395ww(b)(3)(A)) is amended to read as
follows:
``(3)(A) Target Amount.--
``(i) Calculation of target amount.--Subject to
clauses (ii) and (iii), and except as provided in
subparagraphs (C), (D), and (E), for purposes of this
subsection, the term `target amount' means--
``(I) with respect to the first 12-month cost
reporting period in which this subparagraph is
applied to the hospital, the average allowable
operating costs of inpatient hospital services
(as defined in subsection (a)(4)) recognized
under this title for such hospital for the
hospital's two most recent 12-month cost
reporting periods beginning on or after October
1, 1990, subject to the floor and ceiling for
target amounts as specified in clause (ii), and
increased by the applicable percentage
increases under subparagraph (B)(ii) for the
hospital's succeeding cost reporting periods
beginning before fiscal year 1996, or
``(II) with respect to a later cost reporting
period, the target amount for the preceding
cost reporting period, increased by the
applicable percentage increase under
subparagraph (B)(ii).
``(ii) Floor and ceiling.--Subject to clause (iii),
the target amount determined under this subparagraph
for a hospital or unit shall not be less than 70
percent nor more than 150 percent of the national mean
(adjusted by an appropriate wage index) of the
operating costs of inpatient hospital services
determined under this paragraph for hospitals (and
units thereof as applicable) of each type of hospital
described in subsection (d)(1)(B) for the cost
reporting periods noted in clause (i)(I) and updated by
the applicable percentage increase under subparagraph
(B)(ii).
``(iii) New hospitals.--In the case of a hospital
that does not have a cost reporting period beginning
before October 1, 1990--
``(I) with respect to cost reporting periods
beginning during the hospital's first two
fiscal years of operation, the amount of
payment made under this title with respect to
operating costs of inpatient hospital services
(as defined in subsection (a)(4)) shall be the
reasonable costs for providing such services,
except that such amount may not exceed 150
percent of the national mean as determined and
updated in clause (ii),
``(II) with respect to a later cost reporting
period, clauses (i) and (ii) shall apply to
such hospital except that the target amount for
the hospital shall be the average allowable
operating costs of inpatient hospital services
(as defined in subsection (a)(4)) recognized
under this title for the hospital's first two
12-month cost reporting periods beginning at
least one year after the hospital accepts its
first patient.''.
(c) Exceptions and Adjustments.--Section 1886(b)((4)(A)(i)
(42 U.S.C. 1395ww(b)(4)(A)(i)) is amended by inserting the
following after the first sentence: * * *
* * * * * * *
SEC. 11110. REDUCTIONS TO CAPITAL PAYMENTS FOR PPS-EXEMPT HOSPITALS.
Section 1861(v)(1) (42 U.S.C. 1395x(v)(1)) is amended by
adding at the end the following new subparagraph:
``(T) Reductions for pps-exempt hospitals.--Such
regulations shall provide that, in determining the
amount of the payments that may be made under this
title with respect to the capital-related costs of
inpatient hospital services furnished by a hospital
that is not a subsection (d) hospital (as defined in
section 1886(d)(1)(B)) or a subsection (d) Puerto Rico
hospital (as defined in section 1886(d)(9)(A)), the
Secretary shall reduce the amounts of such payments
otherwise established under this title by 15 percent
for payment attributable to portions of cost reporting
periods occurring during each of the fiscal years 1996
through 2005.''.
SEC. 11111. MAINTAINING SAVINGS RESULTING FROM TEMPORARY FREEZE ON
PAYMENT INCREASES FOR SKILLED NURSING FACILITIES.
(a) Basing Updates to Per Diem Cost Limits Effective for
Fiscal Year 1996 on Limits for Fiscal Year 1993.--
(1) In general.--The last sentence of section 1888(a)
(42 U.S.C. 1395yy(a)) is amended by adding at the end
the following: ``, except that the limits effective
October 1, 1995 shall be based on the limits effective
on October 1, 1992 and shall not take into account any
changes in the routine service costs of skilled nursing
facilities occurring during cost reporting periods
which began during fiscal year 1994 or fiscal year
1995.''.
(2) No exceptions permitted based on amendment.--The
Secretary of Health and Human Services shall not
consider the amendment made by paragraph (1) in making
any adjustments pursuant to section 1888(c) of the
Social Security Act.
(b) Payments Determined on Prospective Basis.--Prospective
payments made to skilled nursing facilities under section
1888(d) of the Social Security Act for cost reporting periods
beginning on or after October 1, 1995, shall be based on the
rates effective for cost reporting periods beginning October 1,
1992, and before October 1, 1993, and shall not take into
account any changes in the costs of services occurring during
cost reporting periods which began during fiscal year 1994 or
fiscal year 1995.
SEC. 11112. INTERIM PROSPECTIVE PAYMENT FOR SKILLED NURSING FACILITIES.
(a) In general.--Section 1888 (42 U.S.C. 1395yy) is amended
by adding at the end the following:
``(e) Payment on an Interim Prospective Basis.--The
Secretary shall, for cost reporting periods beginning on or
after October 1, 1996, provide for payment for routine service
costs (excluding capital-related costs) of extended care
services in accordance with a prospective payment system
established by the Secretary in the amounts provided in
subsection (f), subject to the exceptions and limitations in
subsections (g) and (h).
``(f) Determination of Payment Amounts.--
``(1) Per diem basis.--The amount of payment under
subsection (e) shall be determined on a per diem basis.
``(2) Use of base year costs updated by market
basket.--The Secretary shall compute the routine
service costs per diem in a base year (determined by
the Secretary) for each skilled nursing facility, and
shall update the per diem rate on the basis of a market
basket, excluding increases in routine service costs
associated with fiscal year 1994 and fiscal year 1995,
and other factors as the Secretary determines
appropriate.
``(3) Limitation on base year costs.--The base year
routine service costs used to determine the per diem
rate applicable to a skilled nursing facility may not
exceed the following limits:
``(A) Rural areas.--With respect to skilled
nursing facilities located in rural areas, the
limit shall be equal to 112 percent of the mean
per diem routine service costs in a base year
(determined by the Secretary) for freestanding
skilled nursing facilities located in rural
areas within the same region.
``(B) Urban areas.--With respect to skilled
nursing facilities located in urban areas, the
limit shall be equal to 112 percent of the mean
per diem routine service costs in a base year
(determined by the Secretary) for freestanding
skilled nursing facilities located in urban
areas within the same region.
``(C) Definitions.--For purposes of this
subsection, urban and rural areas shall be
determined in the same manner as for purposes
of subsection (a), and the term ``region''
shall have the same meaning as under section
1886(d)(2)(D).
``(D) Wage adjustments.--In establishing
limits under this subsection, the Secretary may
make appropriate adjustments to the labor-
related portion of the costs based upon on a
wage index and other factors as the Secretary
determines appropriate.
``(4) New skilled nursing facilities.--Skilled
nursing facilities entering the Medicare program
subsequent to the base period, determined in subsection
(f)(1), shall receive a routine payment rate equal to
the mean per diem routine costs of skilled nursing
facilities in the urban or rural area in which they are
located by region. The Secretary shall compute these
payment rates using per diem costs in a base year
(determined by the Secretary) and shall update the
rates on the basis of a market basket and other factors
as the Secretary determines appropriate.
``(5) Low medicare volume facilities.--Effective for
cost reporting periods beginning on or after October 1,
1996, low Medicare volume skilled nursing facilities,
as described in subsection (d), shall receive payment
for routine service costs as otherwise set forth in
subsections (e) through (j), except that they may elect
to receive payment on the basis of the rates described
in subsection (f)(4).
``(6) Case mix adjustments.--The Secretary may make
prospective adjustments to the routine payment rates to
account for changes in facility patient mix (case mix)
as the Secretary determines appropriate. Such
adjustments shall be made in a manner which does not
increase expenditures for the routine costs of skilled
nursing facility services beyond what would otherwise
occur.
``(g) Hold Harmless Payments.--
``(1) In general.--Subject to paragraphs (2) and (3),
a facility's per diem payment rate based on the
application of subsections (e) and (f) is the greater
of--
``(A) its per diem payment amount in the base
year, and
``(B) its base year cost per diem up to the
regional limit plus any exception amounts that
may have been granted in the base year
(adjusted by the market basket).
``(2) Limit.--The payment rate determined under
paragraph (1) shall not exceed the facility's cost per
diem incurred in the base year adjusted by the market
basket.
``(3) New entity exception.--Subparagraph (1)(A) does
not apply if the per diem payment amount in the base
year was determined on the basis of an exemption under
subsection (f)(4).
``(h) Upper Limits on Reasonable Costs.--The Secretary, in
making determinations on the reasonable costs (both capital and
operating) of ancillary services provided by skilled nursing
facilities under part A, shall utilize as an upper limit, the
carrier fee schedules applicable to such services as specified
in sections 1834 and 1848. This subsection shall not have the
effect of mitigating other limits on the reasonable costs of
ancillary services currently in effect under Part A such as
those specified in section 1861(v)(5)(A).
``(i) Elimination of Exceptions and Exemptions.--
Exceptions, as described in subsection (c), and exemptions, as
described in the applicable regulations, are eliminated for
cost reporting periods beginning on or after October 1,
1996.''.
(b) Consolidated Billing and Uniform Coding.--
(1) In general.--Section 1862(a) (42 U.S.C. 1395y(a))
is amended--
(A) by striking ``or'' at the end of
paragraph (14),
(B) by striking the period at the end of
paragraph (15) and adding a semicolon, and
(C) by inserting after paragraph (15) the
following:
``(16) which are other than physicians' services,
services described by sections 1861(s)(2)(K)(i) through
(iii), certified nurse-midwife services, qualified
psychologist services, and services of a certified
registered nurse anesthetist, and which are furnished
to an individual who is a resident of a skilled nursing
facility by an entity other than the skilled nursing
facility, unless the services are furnished under
arrangements (as defined in section 1861(w)(1)) with
the entity made by the skilled nursing facility; or
``(17) which are on a claim submitted by a skilled
nursing facility under this title, unless the claim
uses the HCFA common procedure coding system.''.
(2) Conforming amendment.--Section 1866(a)(1)(H) (42
U.S.C. 1395cc(a)(1)(H)) is amended--
(A) by striking ``(i)'' and inserting ``(I)''
and striking ``(ii)'' and inserting ``(II)'',
(B) by striking ``(H)'' and inserting
``(H)(i)'', and
(C) by adding at the end the following:
``(ii) in the case of skilled nursing facilities which
provide services for which payment may be made under this
title, to have all items and services (other than physicians'
services, and other than services described by section
1861(s)(2)(K)(i) through (iii), certified nurse-midwife
services, qualified psychologist services, and services of a
certified registered nurse anesthetist)--
``(I) that are furnished to an individual who is a
resident of the skilled nursing facility, and
``(II) for which the individual is entitled to have
payment made under this title, furnished by the skilled
nursing facility or otherwise under arrangements (as
defined in section 1861(w)(1)) made by the skilled
nursing facility,''.
(3) Effective date.--the amendments made by the
preceding paragraphs are effective for services
furnished on or after October 1, 1996.
SEC. 11113. FULL PROSPECTIVE PAYMENT SYSTEM FOR SKILLED NURSING
FACILITIES.
(a) In General.--Section 1888 (42 U.S.C. 1395yy) is amended
by striking subsections (e) through (i) (as added by section
11112(a) of this Act) and adding the following:
``(e) Full Prospective Payment System.--
``(1) In general.--The Secretary shall provide for
payment for all costs of extended care services
(including routine service costs, ancillary costs, and
capital related costs) in accordance with a prospective
payment system established by the Secretary.
``(2) Budget savings.--Prior to implementing the
prospective payment system described in paragraph (1)
in a budget neutral fashion, the Secretary shall
reduce, by 7 percent, the per diem rates for routine
costs, and the reasonable costs for ancillary services
and capital for skilled nursing facilities as such
rates and costs are in effect on September 30, 1998.''.
(b) Effective Date.--The amendments made by the preceding
subsection apply to cost reporting periods beginning on or
after October 1, 1998.
SEC. 11114. SALARY EQUIVALENCY GUIDELINES FOR THERAPY SERVICES.
Section 1861(v)(5) (42 U.S.C. 1395x(v)(5)) is amended--
(1) by redesignating subparagraph (B) as subparagraph
(D),
(2) in subparagraph (D), as redesignated, by adding
``(B), or (C),'' after ``subparagraph (A),'',
(3) by inserting the following after subparagraph
(A):
``(B) Salary Equivalency Guidelines for Therapy Services.--
``(i) In general.--Effective for services furnished
on or after January 1, 1996, the Secretary shall
establish guidelines relating to occupational therapy
services and speech-language pathology services, and
revise guidelines established under the subparagraph
(A) relating to respiratory therapy services and
physical therapy services using the methodology
described in clause (ii).
``(ii) Calculation of amounts.--The guidelines for
each therapy shall be equal to the sum of:
``(I) the sum of an hourly salary rate, plus
fringe benefits, plus a rental expense factor
(in the same base year), and
``(II) an overhead factor (excluding rental
expenses) equal to 28 percent of the amount
determined in subclause (I),
adjusted by geographical area using the methodology
contained in the final regulation of the Secretary of
Health and Human Services published on page 44928 of
volume 48 of the Federal Register on September 30,
1983, updated annually from the base year to the
current year by an inflation factor.
``(iii) Data.--The data used in establishing the
guidelines under clause (ii) shall be:
``(I) in the case of hourly salary rates, for
each therapy, the 75th percentile of salaries
paid to therapists working full-time in an
employment relationship in the area, from the
most recent available Bureau of Labor
Statistics (BLS) hospital salary data for each,
increased by 10 percent,
``(II) in the case of fringe benefits, for
each therapy, an aggregate factor derived from
hospital cost reports ending in fiscal year
1991 for BLS survey areas used in subclause
(I),
``(III) in the case of the rental expense
factor, for each therapy, an amount derived
from local area rental income data compiled by
the Building Owners and Managers Association
International for 1991, for BLS survey areas
used in subclause (I),
``(IV) in the case of the inflation factor,
for each therapy, an amount equal to the
average of Employment Cost Indices for wages
and benefits of Civilian Hospital, Professional
Technical and Clerical Workers, and Private
Executives, Administrators and Managers, and
the Consumer Price Indices-Urban for Housing
and all items less food and energy, weighted by
the relative proportion that each component
represents of the guidelines amounts.
``(C) Use of Additional Data.--Nothing in subparagraph (B)
shall preclude the Secretary from updating the guidelines using
such data sources and methodology as the Secretary determine to
be appropriate, except that any changes to the data sources
will be made through rulemaking in a manner that does not
increase aggregate spending for such services beyond what would
otherwise occur.'', and
(4) by adding at the end the following:
``(E) No Exception for Previous Contracts.--In applying
limitations under section 1861(v)(5), the Secretary shall not
recognize an exception for a provider that entered into a
written binding contract or contingency contract with a
therapist, provider or other organization prior to the date the
initial guidelines are published.''.
SEC. 11115. REMOVAL OF GRADUATE MEDICAL EDUCATION, INDIRECT MEDICAL
EDUCATION, AND DISPROPORTIONATE SHARE HOSPITAL
PAYMENTS FROM THE CALCULATION OF THE ADJUSTED
AVERAGE PER CAPITA COST.
(a) Exclusion of Graduate Medical Education, Indirect
Medical Education, and Disproportionate Share Hospital Payments
From the Calculation of the Adjusted Average Per Capita Cost.--
Section 1851H(2) (as added by subtitle B of this title) is
amended by adding at the end the following: ``Starting in
calendar year 1998, the AAPCC shall not include estimated
amounts that would have been paid for indirect medical
education costs under section 1886(d)(5)(B), disproportionate
share payment adjustments under section 1886(d)(5)(F), and
direct graduate medical education costs under section
1886(h).''.
(b) Payments for Graduate Education Programs.--Section
1851F (as added by subtitle B of this title) is amended by
adding at the end the following:
``(k) Payments for Graduate Medical Education Programs.--
``(1) Additional payments.--
``(A) Additional payment to be made.--
Starting in calendar year 1998, each contract
with an eligible organization under this
section shall provide for an additional payment
for Medicare's share of allowable direct
graduate medical education costs incurred by
such organization for an approved medical
residency program.
``(B) Limitation for risk contracts.--The sum
of such payments to all eligible organizations
having a risk contract under this section shall
not exceed 75 percent of the amount that would
otherwise have been payable to the organization
if the estimated amounts for direct graduate
medical education costs under section 1886(h)
had been included in the AAPCC.
``(2) Allowable costs.--If the eligible organization
has an approved program, the Secretary shall determine
the allowable costs as follows:
``(A) Risk contracts.--In the case of an
eligible organization having a risk contract
under this section, and that incurs all or
substantially all of the costs of the approved
medical residency program, the allowable costs
for such program shall equal the national
average per resident amount times the number of
full-time-equivalent residents in the program.
``(B) Other contracts.--In the case of other
eligible organizations, the allowable costs
shall equal the lesser of--
``(i) the direct graduate medical
education costs incurred by the
organization, and
``(ii) the national average per
resident amount times the number of
full-time-equivalent residents in the
program.
``(3) Costs under contracts with hospitals.--If the
eligible organization has a written agreement with a
hospital or other entity that has an approved medical
residency program, the allowable costs shall include
such payments specified in the agreement for direct
graduate medical education costs incurred for resident
time spent in patient care related activities.
Allowable costs under this paragraph shall not exceed
75 percent of the amount that would have been included
in the AAPCC to account direct graduate medical
education costs (if such costs had not been removed by
the last sentence of section 1851H(2).
``(4) Definitions.--As used in this subsection--
``(A) the terms `approved medical residency
program', `direct graduate medical education
costs', and `full-time-equivalent residents'
have the same meanings as under section
1886(h),
``(B) the term `Medicare's share' means the
amount determined by multiplying the eligible
organization's allowable costs for an approved
medical residency program by the ratio of the
number of individuals enrolled with the
organization under this section to the total
number of individuals enrolled with the
organization,
``(C) the term `national average per resident
amount' means an amount estimated by the
Secretary to equal the weighted average amount
that would be paid per full-time-equivalent
resident under section 1886(h) for the calendar
year (determined separately for primary care
residency programs (including obstetrics and
gynecology residency programs) and for other
residency programs).''.
(c) Additional Payments to Hospitals for Managed Care
Enrollees.--Section 1886(d) (42 U.S.C. 1395ww(d)) is amended by
adding at the end the following:
``(11) Additional Payments to Hospitals for Managed Care
Enrollees.--
``(A) In general.--For portions of cost reporting
periods occurring on or after January 1, 1998, the
Secretary shall provide for an additional payment
amount for subsection (d) hospitals for services
furnished to individuals who are enrolled in an
organization having a contract with an eligible
organization under part C and who are entitled to part
A.
``(B) Amount of payment.--Subject to subparagraph
(F), the amount of such payment shall be determined by
multiplying (i) the sum of the amounts determined under
subparagraphs (C) and (D), by (ii) the product of the
number of discharges determined under subparagraph (E)
and the estimated average per discharge amount that
would otherwise have been paid under section
1886(d)(1)(A) if the individuals had not been enrolled
in an organization having a contract with an eligible
organization under part C.
``(C) Indirect teaching adjustment factor.--The
Secretary shall determine an indirect teaching
adjustment factor equal to 1.11(((1+r) to the
nth power)-1), where `r' and `n' have the same meaning
as in section 1886(d)(5)(B).
``(D) Disproportionate share adjustment.--The
Secretary shall determine a disproportionate share
adjustment factor equal to the disproportionate share
adjustment percentage applicable to the hospital under
section 1886(d)(5)(F).
``(E) Determination of number of discharges.--The
Secretary shall determine the number of discharges as
equal to the lesser of--
``(i) the number of discharges during the
current cost reporting period attributable to
individuals who are enrolled in an organization
having a risk contract and who are entitled to
part A of this title, and
``(ii) the number of discharges paid under
section 1886(d) during the hospital's cost
reporting period beginning in fiscal year 1992
minus the number of discharges paid under
section 1886(d) during the hospital's current
cost reporting period.
``(F) Adjustment for savings.--At the beginning of
each calendar year, the Secretary shall make an
adjustment in the amounts otherwise payable under this
paragraph so that the estimated payments under this
paragraph for the discharges occurring in that calendar
year, together with the estimated amounts payable under
section 1851F for that calendar year, equal 75 percent
of the amounts the Secretary estimates would otherwise
have been payable under section 1851F during that
calendar year if the adjusted average per capita cost
determined under section 1851F included estimated
amounts for indirect medical education costs,
disproportionate share payment adjustments, and direct
graduate medical education costs.''.
(d) Use of Interim Final Regulations.--The Secretary of
Health and Human Services may issue regulations on an interim
final basis to implement this title and the amendments made by
this title.
SEC. 11116. SOLE COMMUNITY HOSPITALS.
(a) Rebasing the Target Amount.--Section 1886(b)(3)(C) (42
U.S.C. 13955ww (b)(3)(C)) is amended--
(1) by striking ``or'' at the end of clause (iii),
(2) in clause (iv)--
(A) by striking ``and each subsequent fiscal
year'', and
(B) by striking the period at the end and
adding a comma,
(3) by inserting after clause (iv) the following:
``(v) with respect to discharges occurring in fiscal
year 1996, the average of--
``(I) the allowable operating costs of
inpatient hospital services (as defined in
subsection (a)(4)) recognized under this title
for the hospital's cost reporting period (if
any) beginning during fiscal year 1992
increased (in a compounded manner) by the
applicable percentage increases applied to such
hospital under this paragraph for cost
reporting periods beginning in fiscal year 1993
and for discharges occurring in fiscal years
1994, 1995, and 1996, and
``(II) the allowable operating costs of
inpatient hospital services (as defined in
subsection (a)(4)) recognized under this title
for the hospital's cost reporting period (if
any) beginning during fiscal year 1993
increased (in a compounded manner) by the
applicable percentage increase applied to such
hospital under this paragraph for discharges
occurring in fiscal years 1994, 1995, and 1996,
or
``(vi) With respect to discharges occurring in fiscal
year 1997 and each subsequent fiscal year, the target
amount for the preceding year (determined without
application of clause (viii)) increased by the
applicable percentage increase under subparagraph
(B)(iv).'', and
(4) by adding at the end the following:
``Notwithstanding clauses (v) and (vi), the target amount with
respect to discharges occurring in fiscal year 1996 and each
subsequent fiscal year shall be the higher of the amount
determined under clause (v) or (vi) (as applicable) and the
target amount with respect to discharges occurring in fiscal
year 1995 (as determined under clause (iv)) increased by the
applicable percentage increase under subparagraph (B)(iv) for
discharges occurring in fiscal year 1996. The Secretary may
substitute more recent cost reporting periods for those
specified in subclause (v) but no more often than every four
fiscal years.''.
(b) Eliminating the Volume Adjustment.--Section
1886(d)(5)(D)(ii) (42 U.S.C. 1395ww(d)(5)(D)(ii)) is amended by
striking ``In'' and inserting ``For cost reporting periods
beginning before October 1, 1995, in''.
SEC. 11117. RURAL PRIMARY CARE HOSPITAL PROGRAM.
(a) In General.--The heading to section 1820 (42 U.S.C.
1395i-4)) is amended to read ``rural primary care hospital
program''.
(b) Expansion of Program to All States.--Section 1820(a)(1)
(42 U.S.C. 1395i-4(a)(1)) is amended by striking ``not more
than 7'' after ``shall make grants to''.
(c) Moratorium on New Essential Access Community Hospital
Designations.--Section 1820 (42 U.S.C. 1395i-4)) is amended--
(1) in subsections (a)(3) and (b)(1)(C), by striking
``essential access community hospitals or'' after
``as'',
(2) in subsection (c)(1)(B), by striking ``an
essential access community hospital'' after ``is
designated as'',
(3) in subsection (d)(1), by striking ``essential
access community hospitals or'' after ``facilities in
the State as'',
(4) in subsection (d)(2), by striking ``or an
essential access community hospital'' after ``rural
primary care hospital'',
(5) by striking subsection (e),
(6) in subsection (g)(1), by amending subparagraph
(A) to read as follows:
``(A) at least one hospital that is not a
rural primary care hospital. and'',
(7) in subsection (i)--
(A) in the heading, by striking ``Hospitals
or'' and ``by Secretary'',
(B) by striking paragraphs (1) and (2)(C),
(C) in paragraph (2)(A)(ii), by striking
``subparagraph (B)'' and inserting ``paragraph
(2)'',
(D) by redesignating paragraph (2) as (1),
(E) by striking the subparagraph designation
``(B)'' and inserting ``(2) Facilities
designated by the Sec- retary.--'',
(F) by striking the heading to paragraph (1)
(as redesignated by subparagraph (D) of this
paragraph) and the subparagraph designation
``(A)'' and inserting ``Facilities designated
by the state.--'', and
(G) by redesignating clauses (i) through
(iii) of paragraph (1) (as redesignated by
subparagraph (D) of this paragraph) as
subparagraphs (A) through (C), and
(8) in paragraphs (1) and (2) of subsection (j), by
striking ``an essential access community hospital or''
each time it appears.
(d) Continuing Participation of Rural Primary Care
Hospitals.--Section 1820(h)(1)(A) (42 U.S.C. 1395i-4(h)(1)(A))
(as redesignated by subsection (c)(7) of this section) is
amended by inserting before the semicolon the following: ``(or
in a State which the Secretary finds would receive a grant
under such subsection during a fiscal year if funds were
appropriated for grants under such subsection for the fiscal
year)''.
(e) Designation of Nonprofit or Public Hospitals.--Section
1820(f)(1)(A) (42 U.S.C. 1395i-4(f)(1)(A)) is amended by
inserting ``is a nonprofit or public hospital, and is'' after
``(A)''.
(f) Establishing a Minimum Separation Distance Between
Facilities.--Section 1820(f)(1) (42 U.S.C. 1395i-4(f)(1)) is
amended--
(1) by striking ``and'' at the end of subparagraph
(G),
(2) by striking the period at the end of subparagraph
(H) and adding a semicolon, and
(3) by adding at the end the following:
``(I) is located at least a 35-mile drive
from any rural primary care hospital or
hospital, or is certified by the State as being
a necessary provider of health care services to
residents in the area, because of local
geography or service patterns.''.
(g) Removal of Requirement for Prior Compliance With
Hospital Standards.--Section 1820(f)(1)(B) (42 U.S.C. 1395i-
4(f)(1)(B)) is amended by striking ``and had not been found, on
the basis of a survey under section 1864, to be in violation of
any requirement to participate as a hospital under this
title''.
(h) Limitation on Number of Inpatient Beds.--The matter in
section 1820(f)(1)(F) (42 U.S.C. 1395i-4(f)(1)(F)) preceding
clause (i) is amended by striking ``6'' and inserting ``15''.
(i) Limitation on Length of Inpatient Stays.--Section
1820(f) (42 U.S.C. 1395i-4(f)) is amended--
(1) in the matter in paragraph (1)(F) preceding
clause (i), by striking ``subject to paragraph (4),'',
(2) in paragraph (1)(F)(i), by striking ``72 hours''
and inserting ``96 hours'', and
(3) by striking paragraph (4).
(j) Conforming Change.--Section 1814(a)(8) (42 U.S.C.
1395f(a)(8)) is amended by striking ``within 72 hours'' and
inserting ``within 96 hours''.
(k) Permitting Rural Primary Care Hospitals To Maintain
Swing Beds.--Section 1820(f)(3) (42 U.S.C. 1395i-4(f)(3)) is
amended--
(1) in the first sentence, by striking everything
after ``are used for the furnishing of extended care
services'' up to the period, and
(2) by amending the second sentence to read as
follows: ``Nothing in this subsection shall be
construed to prohibit a rural primary care hospital
from entering into an agreement under section 1883
under which its facilities are used for the furnishing
of extended care services.''.
(l) Conforming Change.--Section 1883 (42 U.S.C. 1395tt) is
amended by striking ``hospital'' each place it appears and
inserting ``hospital or rural primary care hospital''.
(m) Change in Payment Methodology.--Section 1814(l)(1) (42
U.S.C. 1395f(l)(1)) is amended by striking ``services--'' and
all that follows and inserting ``services is the reasonable
cost of the rural primary care hospital in providing such
services, as determined under section 1861(v).''.
(n) Elimination of Deadline for Development of Prospective
Payment System.--Section 1814(l) (42 U.S.C. 1395f(l)(1)) is
amended--
(1) by striking paragraph (2), and
(2) by striking ``(l)(1)'' and inserting ``(l)''.
(o) No Change in Payment to Existing Essential Access
Community Hospitals.--Clauses (iii)(III) and (v) of Section
1886(d)(5)(D) (42 U.S.C. 1395ww(d)(5)(D)) are each amended by--
(1) inserting ``was'' after ``is located in a rural
area and'', and
(2) inserting ``as in effect on the day before
effective date of the Balanced Budget Act of 1995 for
Economic Growth and Fairness'' after ``section
1820(I)(1)''.
(p) Conforming Amendment.--Section 1820(c)(3) (42 U.S.C.
1395i-4(c)(3)) is amended by striking ``(i)(2)(C)'' and
inserting ``(i)(2)'';
(q) Technical Amendment.--Section 1820(f)(1)(A) (42 U.S.C.
1395i-4(f)(1)(A)) is amended by striking ``section
1866(d)(2)(D)'' and inserting ``section 1886(d)(2)(D)''.
SEC. 11118. RESPITE BENEFIT.
(a) Entitlement.--Section 1832(a)(2) (42 U.S.C.
1395k(a)(2)) is amended by--
(1) striking ``and'' at the end of subparagraph (I),
(2) striking the period at the end of subparagraph
(J) and inserting ``; and'', and
(3) inserting at the end the following new
subparagraph:
``(K) respite services for no more than 32
hours each year''.
(b) Conditions and Limitations on Payment.--
(1) Payment rate.--Section 1833(a)(2) (42 U.S.C.
13951(a)(2)) is amended by--
(A) adding a new subparagraph (G) to read as
follows:
``(G)(i) with respect to respite services,
payment shall be made at a rate equal to $7.50
per hour for 1996 and at a rate to be
determined by the Secretary in subsequent
years; and
``(ii) notwithstanding any provisions of
section 1861(v), in the case of respite
services furnished by a home health agency (or
other organization designated by the Secretary
pursuant to regulations), payment to the agency
or other organization for respite services may
not exceed 110 percent of the hourly respite
allowance times the number of hours of respite
for which the agency authorizes payment.''
(2) Conditions of payment.--Section 1835(a)(2) (42
U.S.C. 1395n-(a)(2)) is amended by--
(A) striking ``and'' at the end of
subparagraph (E),
(B) striking the period at the end of
subparagraph (F) and inserting ``; and'', and
(C) inserting at the end the following new
subparagraph:
``(G) In the case of respite services, that
the individual for whom payment is claimed is
severely impaired due to irreversible dementia
(the individual has scored three or more errors
on the Short Portable Mental Status
Questionnaire) and either needs assistance in
at least one out of five activities of daily
living (bathing, dressing, transferring,
toileting, and eating) or in at least one out
of four instrumental activities of daily living
(meal preparation, medication management, money
management, and telephoning), or needs constant
supervision because of one or more behavioral
problems.''
(3) Family designation of respite services provider
and care giver.--Section 1835(a)(2) (42 U.S.C.
1295n(a)(2)) is amended by--
(A) by adding at the end the following new
sentences: ``In the case of respite services
which are the subject of the certification
described in subparagraph (G), the entity or
individual providing the care for which respite
is sought shall designate a respite services
caregiver either through a home health agency
or (if the Secretary designates other
organizations to provide or arrange for such
services) other organization. The agency or
organization shall determine the amount of
respite entitlement remaining in the calendar
year and inform the entity or individual of the
extent to which respite services may be
authorized. When services have been provided,
the entity or individual shall inform the
agency or organization, which shall then make
payment to the caregiver. Where additional
payment is made on behalf of the beneficiary,
the agency or organization shall assure the
entity or individual is informed of the limits
applicable to such amount. No payment may be
made under this title for respite services if
the charge to the patient per hour for care by
respite aides exceeds by more than two dollars
the hourly rates established under this
title.''
(c) Definitions.--Section 1861 (42 U.S.C. 1395x) is
amended--
(1) in subsection (m)--
(A) by striking ``and'' at the end of
paragraph (6);
(B) by adding ``and'' at the end of paragraph
(7); and
(C) by inserting after paragraph (7) the
following:
``(8) respite services as described in subsection
(oo);'',
(2) in subsection (o)--
(A) by striking ``and'' at the end of
paragraph (6);
(B) by adding ``and'' at the end of paragraph
(7); and
(C) by inserting after paragraph (7) the
following:
``(8) agrees to provide or arrange for respite
services as described in subsection (oo);'', and
(3) by adding at the end the following:
``(oo) Respite Services; Respite Aides; Respite
Providers.--
``(1) Respite services.--The term `respite services'
means temporary care provided to individuals who meet
the requirements of section 1835(a)(2) for the purposes
of ensuring periodic time-off for co-resident primary
informal caregivers. Although respite providers may
provide assistance with personal care and/or household
maintenance activities, their primary function is to
provide protective supervision for persons with
Alzheimer's and related dementias whose memory,
orientation, judgment, and reasoning abilities have
become so impaired that, for safety's sake , they
require the constant attention or close physical
proximity of another person at all or almost all hours
of the day or night.
``(2) Respite aides.--The term `respite aides' means
individuals who have been designated by the Secretary
as qualified to act as caregivers for purposes of
providing the services described in paragraph (1).
Respite aides may be nurse aides as identified in
section 1819, home health aides as identified in
section 1891, or other individuals licensed by the
State or recognized by the Secretary as having the
skills necessary to provide such services.
``(3) Respite providers.--The term `respite
providers' means organizations identified by the
Secretary in regulations as qualified to provide or
arrange for respite services under this title. The
Secretary may establish by regulation any requirements
for respite providers as the Secretary determines
appropriate.''.
(d) Payment From Supplementary Medical Insurance Trust Fund
for Respite Services Furnished to Individuals With Only
Hospital Insurance Coverage.--(Section 1812(a) (42 U.S.C.
1395(a)) is amended by--
(1) striking ``and'' and the end of paragraph (3),
(2) striking the period at the end of paragraph (4),
and inserting ''; and'', and
(3) inserting at the end the following new paragraph:
``(5) respite services, described in section
1832(a)(2)(K), except that such services shall be
furnished under the Supplementary Medical Insurance
Program.''
(e) Exclusion of Additional Part B Costs From Determination
of Part B Monthly Premium.--Section 1839(a)(5) (42 U.S.C.
1395r(a)), as added by section 11147(f) of this Act, is further
amended by--
(1) inserting ``and Respite Benefit'' after ``Home
Health'', and
(2) inserting before the period the following:
``and for respite services as described in section
1832(a)(2)(K).''
(f) Sunset.--The amendments made by this shall be effective
for services furnished through fiscal year 2005.
PART 2--PROVISIONS RELATING TO PART B
SEC. 11121. PAYMENTS FOR PHYSICIANS' SERVICES.
(a) Establishing Update to Conversion Factor To Match
Spending Under Sustainable Growth Rate.--
(1) Update.--
(A) In general.--Section 1848(d)(3) (42
U.S.C. 1395w-4(d)(3)) is amended to read as
follows:
``(3) Update.--
``(A) In general.--Unless Congress otherwise
provides, subject to subparagraph (E), for
purposes of this section the update for a year
(beginning with 1997) is equal to the product
of--
``(i) 1 plus the Secretary's estimate
of the percentage increase in the MEI
(described in section 1842(i)(3)) for
the year (divided by 100), and
``(ii) 1 plus the Secretary's
estimate of the update adjustment
factor for the year (divided by 100),
minus 2 and multiplied by 100.
``(B) Update adjustment factor.--The `update
adjustment factor' for a year is equal to the
quotient of--
``(i) the difference between (I) the
sum of the allowed expenditures for
physicians' services furnished during
each of the years 1995 through the year
involved and (II) the sum of the amount
of actual expenditures for physicians'
services furnished during each of the
years 1995 through the previous year,
divided by
``(ii) the Secretary's estimate of
allowed expenditures for physicians'
services furnished during the year.
``(C) Determination of allowed
expenditures.--For purposes of subparagraph
(B), allowed expenditures for physicians'
services shall be determined as follows (as
estimated by the Secretary):
``(i) 1995.--In the case of allowed
expenditures for 1995, such
expenditures shall be equal to actual
expenditures for services furnished
during the 12-month period ending with
June 30, 1995.
``(ii) 1996 and later years.--In the
case of allowed expenditures for 1996
and each subsequent year, such
expenditures shall be equal to allowed
expenditures for the previous year,
increased by the sustainable growth
rate under subsection (f) for the
fiscal year which begins during the
year.
``(D) Determination of actual expenditures.--
For purposes of subparagraph (B), the amount of
actual expenditures for physicians' services
furnished during a year shall be equal to the
amount of expenditures for such services during
the 12-month period ending with June of the
previous year.
``(E) Restriction on variation from medicare
economic index.--Notwithstanding the amount of
the update adjustment factor determined under
subparagraph (B), the update in the conversion
factor under this paragraph for a year may not
be--
``(i) greater than 103 percent of 1
plus the Secretary's estimate of the
percentage increase in the MEI
(described in section 1842(i)(3)) for
the year (divided by 100), minus 1 and
multiplied by 100, or
``(ii) less than 93 percent of 1 plus
the Secretary's estimate of the
percentage increase in the MEI
(described in section 1842(i)(3)) for
the year (divided by 100), minus 1 and
multiplied by 100.''.
(B) Effective date.--The amendments made by
subparagraph (A) apply to physicians' services
furnished on or after January 1, 1997.
(2) Conforming amendments.--
(A) Section 1848(d)(2).--Section
1848(d)(2)(A) (42 U.S.C. 1395w-4(d)(2)(A)) is
amended--
(i) in the matter preceding clause
(i)--
(I) by striking ``(or
updates) in the conversion
factor (or factors)'' and
inserting ``in the conversion
factor'',
(II) by striking ``(beginning
with 1991)'' and inserting
``(beginning with 1996)'', and
(III) by striking the second
sentence,
(ii) by amending clause (ii) to read
as follows:
``(ii) such factors as enter into the
calculation of the update adjustment
factor as described in paragraph
(3)(B); and '',
(iii) by amending clause (iii) to
read as follows:
``(iii) access to services.'',
(iv) by striking clauses (iv), (v),
and (vi), and
(v) by striking the last sentence.
(B) Section 1848(d)(2)(b).--Section
1848(d)(2)(B) (42 U.S.C. 1395w-4(d)(2)(B)) is
amended--
(i) by striking ``and'' at the end of
clause (iii),
(ii) by striking the period at the
end of clause (iv) and adding ``;
and'', and
(iii) by adding at the end the
following new clause:
``(v) changes in volume or intensity
of services.''.
(C) Redesignation of subparagraph.--Section
1848(d)(2) (42 U.S.C. 1395w-4(d)(2)) is further
amended--
(i) by striking subparagraphs (C),
(D), and (E),
(ii) by redesignating striking
subparagraph (F) as subparagraph (C),
and
(iii) in subparagraph (C), as
redesignated, by striking ``(or
updates) in the conversion factor (or
factors)'' and inserting ``in the
conversion factor''.
(b) Replacement of Volume Performance Standard With
Sustainable Growth Rate.--
(1) In general.--Section 1848(f) (42 U.S.C. 1395w-
4(f)) is amended by striking paragraphs (2) through (5)
and inserting the following:
``(2) Specification of growth rate.--
``(A) Fiscal year 1996.--The sustainable
growth rate for all physicians' services for
fiscal year 1996 shall be equal to the product
of--
``(i) 1 plus the Secretary's estimate
of the percentage increase in the MEI
(described in section 1842(i)(3)) for
1996 (divided by 100),
``(ii) 1 plus the Secretary's
estimate of the percentage change
(divided by 100) in the average number
of individuals enrolled under this part
(other than private plan enrollees)
from fiscal year 1995 to fiscal year
1996,
``(iii) 1 plus the Secretary's
estimate of the projected percentage
growth in real gross domestic product
per capita (divided by 100) from fiscal
year 1995 to fiscal year 1996, plus 1
percentage point, and
``(iv) 1 plus the Secretary's
estimate of the percentage change
(divided by 100) in expenditures for
all physicians' services in fiscal year
1996 (compared with fiscal year 1995)
which will result from changes in law
(including the Balanced Budget Act of
1995 for Economic Growth and Fairness),
determined without taking into account
estimated changes in expenditures due
to changes in the volume and intensity
of physicians' services or change in
expenditures resulting from changes in
the update to the conversion factor
under subsection (d),
minus 1 and multiplied by 100.
``(B) Subsequent years.--The sustainable
growth rate for all physicians' services for
fiscal year 1997 and each subsequent year shall
be equal to the product of--
``(i) 1 plus the Secretary's estimate
of the percentage increase in the MEI
for the fiscal year involved (described
in section 1842(i)(3)) (divided by
100),
``(ii) 1 plus the Secretary's
estimate of the percentage change
(divided by 100) in the average number
of individuals enrolled under this part
(other than private plan enrollees)
from the previous fiscal year to the
fiscal year involved,
``(iii) 1 plus the Secretary's
estimate of the projected percentage
growth in real gross domestic product
per capita (divided by 100) from the
previous fiscal year to the fiscal year
involved, plus 1 percentage point, and
``(iv) 1 plus the Secretary's
estimate of the percentage change
(divided by 100) in expenditures for
all physicians' services in the fiscal
year (compared with the previous fiscal
year) which will result from changes in
law, determined without taking into
account estimated changes in
expenditures due to changes in the
volume and intensity of physicians'
services or change in expenditures
resulting from changes in the update to
the conversion factor under subsection
(d), minus 1 and multiplied by 100.
``(3) Definitions.--In this subsection:
``(A) Services included in physicians'
services.--The term `physicians' services'
includes other items and services (such as
clinical diagnostic laboratory test and
radiology services), specified by the
Secretary, that are commonly performed or
furnished by a physician or in a physician's
office, but does not include services furnished
to an eligible organization enrollee.
``(B) Eligible organization enrollee.--The
term `eligible organization enrollee' means,
with respect to a fiscal year, an individual
enrolled under this part who has elected to
receive benefits under this title through an
eligible organization with a contract under
part C (and, through 2000, enrollment with an
organization with a contract under section
1876(h).''.
(2) Conforming amendments.--Section 1848(f) (42
U.S.C. 1395w-4(f)) is amended--
(A) in the heading, by striking ``volume
performance standard rates of increase'' and
inserting ``sustainable growth rate'',
(B) in paragraph (1)--
(i) in the heading, by striking
``volume performance standard rates of
increase'' and inserting ``sustainable
growth rate'',
(ii) in subparagraph (A), in the
matter preceding clause (i), by
striking ``performance standard rates
of increase'' and inserting
``sustainable growth rate'', and
(iii) in subparagraph (A), by
striking ``HMO enrollees'' each place
it appears and inserting ``eligible
organization enrollees'',
(C) in subparagraph (B), by striking
``performance standard rates of increase'' and
inserting ``sustainable growth rate'', and
(D) in subparagraph (C)--
(i) in the heading, by striking
``performance standard rates of
increase'' and inserting ``sustainable
growth rate'',
(ii) in the first sentence, by
striking ``with 1991), the performance
standard rates of increase'' and all
that follows through the first period
and inserting ``with 1997), the
sustainable growth rate for the fiscal
year beginning in that year.'', and
(iii) in the second sentence, by
striking ``January 1, 1990, the
performance standard rate of increase
under subparagraph (D) for fiscal year
1990'' and inserting ``January 1, 1997,
the sustainable growth rate for fiscal
year 1997''.
(c) Establishment of Single Conversion Factor for 1996.--
(1) In general.--Section 1848(d)(1) (42 U.S.C. 1395w-
4(d)(1)) is amended--
(A) by redesignating subparagraph (C) as
subparagraph (D), and
(B) by inserting after subparagraph (B) the
following:
``(C) Special rule for 1996.--For
1996, the conversion factor under this
subsection shall be $35.42 for all
physicians' services, except that, for
surgical services (as defined in
subsection (j)(i), the conversion
factor for 1996 shall be $38.10.''.
(2) Conforming amendments.--Section 1848 (42 U.S.C.
1395w-4) is amended--
(A) by striking ``(or factors)'' each place
it appears in subsection (d)(1)(A) and
(d)(1)(D)(ii) (as redesignated by paragraph
(1)(a),
(B) in subsection (d)(1)(A), by striking ``or
updates'',
(C) in subsection (d)(1)(D)(ii) (as
redesignated by paragraph (1)(A)), by striking
``(or updates)'', and
(D) in subsection (i)(1)(C), by striking
``conversion factors'' and inserting ``the
conversion factor''.
SEC. 11122. PRACTICE EXPENSE RELATIVE VALUE UNITS.
(a) Extension to 1997.--Section 1848(c)(2)(E)(i) (42 U.S.C.
1395w-4(c)(2)(E)(i)) is amended--
(1) by striking ``and'' at the end of subclause (II),
(2) by striking the period at the end of subclause
(III) and inserting ``, and'', and
(3) by inserting at the end the following:
``(IV) 1997, by an additional 25 percent of
such excess.''
(b) Change in Floor on Reductions and Services Covered.--
Clauses (ii) and (iii)(II) of Section 1848(c)(2)(E) (42 U.S.C.
1395w-4(c)(2)(E)) are each amended by inserting ``(or 115
percent in the case of 1997)'' after ``128 percent''.
SEC. 11123. SINGLE FEE FOR SURGERY.
(a) In General.--Section 1848(a) (42 U.S.C. 1395w-4(a)) is
amended by adding at the end the following:
``(5) Single fee for surgery.--
``(A) General rule.--Payment under this part
for surgical services (as defined by the
Secretary under subsection (j)(1)), when a
separate payment is also made for the services
of a physician or physician assistant acting as
an assistant at surgery, may not (except as
provided in subparagraph (B)), when added to
the separate payment made for the services of
that other practitioner, exceed the amount that
would be paid for the surgical services if a
separate payment were not made for the services
of that practitioner.
``(B) Exceptions.--The Secretary may specify
surgery procedures or situations to which
subparagraph (A) shall not apply.''
(b) Conforming Amendment.--Section 1848(g)(2)(D) (42 U.S.C.
1395w-4(g)(2)(D)) is amended by inserting ``(or the lower
amount under subsection (a)(5))'' after ``subsection (a)''.
(c) Effective Date.--The amendments made by the preceding
subsections apply to services furnished on or after January 1,
1996.
SEC. 11124. INCENTIVES TO CONTROL HIGH VOLUME FOR IN-HOSPITAL
PHYSICIANS' SERVICES.
(a) In General.--
(1) Limitations described.--Part B of title XVIII is
amended by adding at the end the following:
``SEC. 1849. INCENTIVES TO CONTROL HIGH VOLUME FOR IN-HOSPITAL
PHYSICIANS' SERVICES.
``(a) Services Subject to Reduction.--
``(1) Determination of hospital-specific per
admission relative value.--Not later than October 1 of
each year (beginning with 1998), the Secretary shall
determine for each hospital--
``(A) the hospital-specific per admission
relative value under subsection (b)(2) for the
following year, and
``(B) whether such hospital-specific relative
value is projected to exceed the allowable
average per admission relative value applicable
to the hospital for the following year under
subsection (b)(1).
``(2) Reduction for services at hospitals exceeding
allowable average per admission relative value.--If the
Secretary determines (under paragraph (1)) that a
medical staff's hospital-specific per admission
relative value for a year (beginning with 1999) is
projected to exceed the allowable average per admission
relative value applicable to the medical staff for the
year, the Secretary shall reduce (in accordance with
subsection (c)) the amount of payment otherwise
determined under this part for each physician's service
furnished during the year to an inpatient of the
hospital by an individual who is a member of the
hospital's medical staff.
``(3) Timing of determination; notice to medical
staffs and carriers.--Not later than October 1 of each
year (beginning with 1998), the Secretary shall notify
the medical executive committee of each hospital (as
set forth in the Standards of the Joint Commission on
the Accreditation of Health Organizations) of the
determinations made with respect to the medical staff
under paragraph (1).
``(b) Determination of Allowable Average per Admission
Relative Value and Hospital--Specific per Admission Relative
Values.--
``(1) Allowable average per admission relative
value.--
``(A) Urban hospitals.--In the case of a
hospital located in an urban area, the
allowable average per admission relative value
established under this subsection for 1999 and
2000 is equal to 125 percent and for years
after 2000 is 120 percent of the median of 1997
hospital-specific per admission relative values
determined under paragraph (2) for all hospital
medical staffs.
``(B) Rural hospitals.--In the case of a
hospital located in a rural area, the allowable
average per admission relative value
established under this subsection for 1999 and
each succeeding year, is equal to 140 percent
of the median of the 1997 hospital-specific per
admission relative values determined under
paragraph (2) for all hospital medical staffs.
``(2) Hospital-specific per admission relative
value.--
``(A) In general.--The hospital-specific per
admission relative value projected for a
hospital (other than a teaching hospital) for a
calendar year, shall be equal to the average
per admission relative value (as determined
under section 1848(c)(2)) for physicians'
services furnished to inpatients of the
hospital by the hospital's medical staff
(excluding interns and residents) during the
second year preceding such calendar year,
adjusted for variations in case-mix and
disproportionate share status among hospitals
(as determined by the Secretary under
subparagraph (C)).
``(B) Special rule for teaching hospitals.--
The hospital-specific relative value projected
for a teaching hospital in a calendar year
shall be equal to the sum of--
``(i) the average per admission
relative value (as determined under
section 1848(c)(2)) for physicians'
services furnished to inpatients of the
hospital by the hospital's medical
staff (excluding interns and residents)
during the second year preceding such
calendar year, and
``(ii) the equivalent per admission
relative value (as determined under
section 1848(c)(2)) for physicians'
services furnished to inpatients of the
hospital by interns and residents of
the hospital during the second year
preceding such calendar year, adjusted
for variations in case-mix,
disproportionate share status, and
teaching status among hospitals (as
determined by the Secretary under
subparagraph (C)). The Secretary shall
determine such equivalent relative
value unit per admission for interns
and residents based on the best
available data and may make such
adjustment in the aggregate.
``(C) Adjustment for teaching and
disproportionate share hospitals.--The
Secretary shall adjust the allowable per
admission relative values otherwise determined
under this paragraph to take into account the
needs of teaching hospitals and hospitals
receiving additional payments under
subparagraphs (F) and (G) of section
1886(d)(5). The adjustment for teaching status
or disproportionate share shall not be less
than zero.
``(c) Amount of Reduction.--The amount of payment otherwise
made under this part for a physician's service that is subject
to a reduction under subsection (a) during a year shall be
reduced 15 percent, in the case of a service furnished by a
member of the medical staff of the hospital for which the
Secretary determines under subsection (a)(1) that the hospital
medical staff's projected relative value per admission exceeds
the allowable average per admission relative value.
``(d) Reconciliation of Reductions Based on Hospital-
Specific Relative Value per Admission With Actual Relative
Values.--
``(1) Determination of actual average per admission
relative value.--Not later than October 1 of each year
(beginning with 2000), the Secretary shall determine
the actual average per admission relative value (as
determined pursuant to section 1848(c)(2)) for the
physicians' services furnished by members of a
hospitals medical staff to inpatients of the hospital
during the previous year, on the basis of claims for
payment for such services that are submitted to the
Secretary not later than 90 days after the last day of
such previous year. The actual average per admission
relative value shall be adjusted by the appropriate
case-mix, disproportionate share factor, and teaching
factor for the hospital medical staff (as determined by
the Secretary under subsection (b)(2)(C)).
Notwithstanding any other provision of this title, no
payment may be made under this part for any physician's
service furnished by a member of a hospital's medical
staff to an inpatient of the hospital during a year
unless such claim is submitted to the Secretary for
payment for such service not later than 90 days after
the last day of the year.
``(2) Reconciliation with reductions taken.--In the
case of a hospital for which the payment amounts for
physicians' services furnished by members of the
hospital's medical staff to inpatients of the hospital
were reduced under this section for a year--
``(A) if the actual average per admission
relative value for such hospital's medical
staff during the year (as determined by the
Secretary under paragraph (1)) did not exceed
the allowable average per admission relative
value applicable to the hospital's medical
staff under subsection (b)(1) for the year, the
Secretary shall reimburse the fiduciary agent
for the medical staff by the amount by which
payments for such services were reduced for the
year under subsection (c), including interest
at an appropriate rate determined by the
Secretary;
``(B) if the actual average per admission
relative value for such hospital's medical
staff during the year exceeded the allowable
average per admission relative value applicable
to the hospital's medical staff under
subsection (a)(1) for the year, the Secretary
shall reimburse the fiduciary agent for the
medical staff the amount withheld under
subsection (c) multiplied by the `final ratio',
including interest at an appropriate rate
determined by the Secretary. The final ratio
described in the previous sentence shall be
determined by dividing the difference between
the initial ratio and 0.85, by 0.15, where the
initial ratio is determined by dividing the
medical staff's allowable average per admission
relative value for a year (as determined under
subsection (a)(1)) by the medical staff's
actual hospital-specific per admission relative
value for such year, but in no case shall the
initial ratio be less than 0.85.
``(3) Medical executive committee of a hospital.--
Each medical executive committee of a hospital whose
medical staff is projected to exceed the allowable
relative value per admission for a year, shall have one
year from the date of notification that such medical
staff is projected to exceed the allowable relative
value per admission to designate a fiduciary agent for
the medical staff to receive and disburse any
appropriate withhold amount made by the carrier.
``(4) Alternative reimbursement to members of
staff.--At the request of a fiduciary agent for the
medical staff, if the fiduciary agent for the medical
staff is owed the reimbursement described in paragraph
(2)(B) for excess reductions in payments during a year,
the Secretary shall make such reimbursement to the
members of the hospital's medical staff, on a pro-rata
basis according to the proportion of expenditures for
physicians' services furnished to inpatients of the
hospital during the year that were furnished by each
member of the medical staff.
``(e) Definitions.--In this section, the following
definitions apply:
``(1) Medical staff.--An individual furnishing a
physician's service is considered to be on the medical
staff of a hospital--
``(A) if (in accordance with requirements for
hospitals established by the Joint Commission
on Accreditation of Health Organizations)--
``(i) the individual is subject to
bylaws, rules, and regulations
established by the hospital to provide
a framework for the self-governance of
medical staff activities,
``(ii) subject to such bylaws, rules,
and regulations, the individual has
clinical privileges granted by the
hospital's governing body, and
``(iii) under such clinical
privileges, the individual may provide
physicians' services independently
within the scope of the individual's
clinical privileges, or
``(B) if such physician provides at least one
service to a medicare beneficiary in such
hospital.
``(2) Rural area; urban area.--The terms `rural area'
and `urban area' have the meaning given such terms
under section 1886(d)(2)(D).
``(3) Teaching hospital.--The term `hospital' means a
hospital which has a teaching program approved as
specified in section 1861(b)(6).
``(4) Hospital.--The term `hospital' means a
subsection (d) hospital as defined in section 1886(d).
``(5) Physicians' services.--The term `physicians'
services' means those services described in section
1848(j)(3).
(2) Conforming amendments.--
(A) Section 1833 (a).--Section 1833(a)(1)(N)
(42 U.S.C. 13951(a)(1)(N)) is amended by
inserting ``(subject to reduction under section
1849)'' after ``1848(a)(1)''.
(B) Section 1848 (a).--Section 1848(a)(1)(B)
(42 U.S.C. 1395w-4(a)(1)(B)) is amended by
striking ``this subsection,'' and inserting
``this subsection and section 1849,''.
(b) Requiring Physicians To Identify Hospital at Which
Service Furnished.--Section 1848(g)(4)(A)(i) (42 U.S.C. 1395w-
4(g)(4)(A)(i)) is amended by striking ``beneficiary,'' and
inserting ``beneficiary (and, in the case of a service
furnished to an inpatient of a hospital, report the hospital
identification number on such claim form),''.
(c) Effective Dates.--
(1) Subsection (a).--The amendments made by
subsection (a) apply to services furnished on or after
January 1, 1999.
(2) Subsection (b).--The amendments made by
subsection (b) apply to services furnished on or after
January 1, 1998.
SEC. 11125. AMBULATORY SURGICAL CENTER SERVICE UPDATES.
Section 1833(i)(2)(C) (42 U.S.C. 13951(i)(2)(C)) is
amended--
(1) by striking ``1996'' and inserting ``2003'', and
(2) by inserting after the subparagraph designation
``(C)'' the following: ``Notwithstanding the second
sentence of subparagraph (A) or the second sentence of
subparagraph (B), with respect to fiscal years 1996
through 2002, the Secretary shall increase amounts for
facility services by the percentage increase in the
consumer price index for all urban consumers (U.S. city
average) as estimated by the Secretary for the 12-month
period ending with the midpoint of the year involved,
reduced by two percentage points.''
SEC. 11126. OXYGEN AND OXYGEN EQUIPMENT.
(a) In General.--Section 1834(a)(9)(C) (42 U.S.C.
1395m(a)(9)(C)) is amended--
(1) by striking ``and'' at the end of clause (iii),
(2) in clause (iv)--
(A) by striking ``a subsequent year'' and
inserting ``1993, 1994, and 1995'', and
(B) by striking the period at the end and
adding ``; and'', and
(3) by adding at the end the following:
``(v) in each of year beginning with
1996 is the national limited monthly
payment rate computed under
subparagraph (B) for the item for the
year reduced by the applicable
percentage described in subparagraph
(D) (but in no case may the amount
determined under this clause be less
than 70 percent of such national
limited payment rate).''.
(b) Applicable Percentage Described.--Section 1834(a)(9)
(42 U.S.C. 1395m(a)(9)) is amended by adding at the end the
following:
``(D) Applicable percentage described.--In
clause (v) of subparagraph (C), the `applicable
percentage' with respect to a year described in
that clause is--
``(i) for 1996, 20 percent,
``(ii) for 1997, 21\2/3\ percent,
``(iii) for 1998, 23\1/3\ percent,
``(iv) for 1999, 25 percent,
``(v) for 2000, 26\2/3\ percent,
``(vi) for 2001, 28\1/3\ percent, and
``(vii) for 2002 and thereafter, 30
percent.''.
SEC. 11127. PAYMENT LIMITS FOR HMOS AND CMPS WITH RISK CONTRACTS.
(a) In General.--Section 1851F(e)(2)(C) (as added by
subtitle B of this title) is amended--
(1) by inserting ``, subject to adjustment to take
into account the provisions of the succeeding clauses''
before the period,
(2) by striking ``The annual'' and inserting ``(i) In
general.--The annual'', and
(3) by adding at the end the following new clauses:
``(ii) Ceiling.--The portion of the annual per capita
rate of payment for each such class attributable to
payments made from the Federal Supplementary Medical
Insurance Trust Fund may not exceed 95 percent of the
following amount (unless the portion of the annual per
capita rate of payment for each such class attributable
to payments made from the Federal Hospital Insurance
Trust Fund is less than 95 percent of the weighted
national average of all adjusted average per capita
costs determined under paragraph (4) for that class
that are attributable to payments made from the Federal
Hospital Insurance Trust Fund):
``(I) 1996.--For 1996, 150 percent of the
weighted national average of all adjusted
average per capita costs determined under
paragraph (4) for that class that are
attributable to payments made from such Trust
Fund, plus 80 percent of the amount by which
(if any) the adjusted average per capita cost
for that class exceeds 150 percent of that
weighted national average.
``(II) 1997.--For 1997, 150 percent of the
weighted national average of all adjusted
average per capita costs determined under
paragraph (4) for that class that are
attributable to payments made from such Trust
Fund, plus 60 percent of the amount by which
(if any) the adjusted average per capita cost
for that class exceeds 150 percent of that
weighted national average.
``(III) 1998.--For 1998, 150 percent of the
weighted national average of all adjusted
average per capta costs determined under
paragraph (4) for that class that are
attributable to payments made from such Trust
Fund, plus 40 percent of the amount by which
(if any) the adjusted average per capita cost
for that class exceeds 150 percent of that
weighted national average.
``(IV) 1999.--For 1999, 150 percent of the
weighted national average of all adjusted
average per capita costs determined under
paragraph (4) for that class that are
attributable to payments made from such Trust
Fund, plus 20 percent of the amount by which
(if any) the adjusted average per capita cost
for that class exceeds 150 percent of that
weighted national average.
``(V) 2000 and later years.--For 2000 and
each succeeding year (subject to the
establishment by the Secretary of alternative
limits under clause (vi)), 150 percent of the
weighted national average of all adjusted
average per capita costs determined under
paragraph (4) for that class that are
attributable to payments made from such Trust
Fund.
``(iii) Floor.--For 1996 and succeeding years, the
portion of the annual per capita rate of payment for
each such class attributable to payments made from the
Federal Supplementary Medical Insurance Trust Fund may
not be less than 80 percent of 95 percent of the
weighted national average of all adjusted average per
capita costs determined under paragraph (4) for that
class that are attributable to payments made from such
Trust Fund, unless the portion of the annual per capita
rate of payment for each such class attributable to
payments made from the Federal Hospital Insurance Trust
Fund is greater than 95 percent of the weighted
national average of all adjusted average per capita
costs determined under paragraph (4) for that class
that are attributable to payments made from the Federal
Hospital Insurance Trust Fund.
``(iv) Future revisions.--For 2001 and succeeding
years, the Secretary may revise any of the percentages
otherwise applicable during a year under the preceding
clauses (other than clause (i)), but only if the
aggregate payments made under this title to eligible
organizations under risk-sharing contracts during the
year is not greater than the aggregate payments that
would have been made under this title to such
organizations during the year if the Secretary had not
revised the percentages.
``(v) Disregard of esrd costs.--For purposes of
clauses (ii) and (iii), in determining the weighted
average of all adjusted average per capita costs
determined under paragraph (4) for a class, the
Secretary shall not take into account any costs
associated with individuals entitled to benefits under
this title under section 226A.''.
(b) Conforming Amendment.--Section 1851F(e) (as added by
subtitle B of this title)) is amended by inserting ``, adjusted
to take into account the limitations imposed by clauses (ii)
through (iv) of paragraph (2)(C)'' before the period.
SEC. 11128. WAIVE COST-SHARING FOR MAMMOGRAPHY.--
(a) Diagnostic Mammography.--Section 1861(s) (42 U.S.C.
1395x(s)) is amended--
(1) in paragraph (3), by striking ``including
diagnostic mammography if conducted by a facility that
has a certificate (or provisional certificate) issued
under section 354 of the Public Health Service Act'',
(2) by striking ``and'' at the end of paragraph (15),
(3) by striking the period at the end of paragraph
(16) and inserting ``; and'', and
(4) by adding at the end the following:
``(17) diagnostic mammography, if conducted by a
facility that has a certificate (or provisional
certificate) issued under section 354 of the Public
Health Service Act.''.
(b) Payment for Screening Mammography.--Section
1834(c)(1)(C) (42 U.S.C. 1395m(c)(1)(C)) is amended by striking
``, subject to the deductible established under section
1833(b),'' and ``80 percent of''.
(c) Waiver of Deductible.--The first sentence of section
1833(b) (42 U.S.C. 1395l(b)) is amended by--
(1) striking ``and'' before ``(4)'', and
(2) inserting the following before the period: ``,
and (5) such deductible shall not apply with respect to
screening and diagnostic mammography described in
section 1861(s)(13) and section 1861(s)(17).''
(d) Waiver of Coinsurance.--Section 1833(a)(1) (42 U.S.C.
1395l(a)(1)) is amended by--
(1) striking ``and'' at the end of clause (O),
(2) inserting after clause (P) the following: ``, and
``(Q) with respect to diagnostic mammography
described in section 1861(s)(17), the amount paid shall
be 100 percent of the fee schedule amount provided
under section 1848.''.
(e) Waiver of Coinsurance in Hospital Outpatient
Departments.--The third sentence of section 1866(a)(2)(A) (42
U.S.C. 1395cc(a)(2)(A)) is amended by inserting after
``1861(s)(10)(A)'' the following: ``, with respect to items and
services described in section 1861(s)(13), with respect to
items and services described in section 1861(s)(17),''.
(f) Effective Date.--The amendments made by the preceding
subsections apply to services furnished on or after January 1,
1997.
SEC. 11129. ANNUAL MAMMOGRAMS.
(a) Providing Annual Screening Mammography for Women Over
Age 49.--Section 1834(c)(2)(A) (42 U.S.C. 1395m) (c)(2)(A)) is
amended--
(1) in clause (iv), by striking ``but under 63 years
of age,'' and
(2) by striking clause (v).
(b) Effective Date.--The amendment made by subsection (a)
applies to services furnished on or after January 1, 1997.
SEC. 11130. COVERAGE OF COLORECTAL SCREENING.
(a) In General.--Section 1834 (42 U.S.C. 1395m) is amended
by inserting after subsection (c) the following:
``(d) Frequency and Payment Limits for Screening Fecal-
Occult Blood Tests, Screening Flexible Sigmoidoscopies and
Screening Colonoscopy.--
``(1) Frequency limits for screening fecal-occult
blood tests.--Subject to revision by the Secretary
under paragraph (4), no payment may be made under this
part for a screening fecal-occult blood test provided
in an individual for the purpose of early detection of
colon cancer if the test is performed--
``(A) in the case of an individual under 65
years of age, more frequently than is provided
in a periodicity schedule established by the
Secretary for purposes of this subparagraph, or
``(B) in the case of any other individual,
within the 11 months following the month in
which a previous screening fecal-occult blood
test was performed.
``(2) Screening flexible sigmoidoscopies.--
``(A) Payment amount.--The Secretary shall
establish a payment amount under section 1848
with respect to screening flexible
sigmoidoscopies provided for the purpose of
early detection of colon cancer that is
consistent with payment amounts under such
section for similar or related services, except
that such payment amount shall be established
without regard to subsection (a)(2)(A) of such
section.
``(B) Frequency limits.--Subject to revision
by the Secretary under paragraph (4), no
payment may be made under this part for a
screening flexible sigmoidoscopy provided to an
individual for the purpose of early detection
of colon cancer if the procedure is performed--
``(i) in the case of an individual
under 65 years of age, more frequently
than is provided in a periodicity
schedule established by the Secretary
for purposes of this subparagraph, or
``(ii) in the case of any other
individual, within the 59 months
following the month in which a previous
screening flexible sigmoidoscopy was
performed.
``(3) Screening colonoscopy for individuals at high
risk for colorectal cancer.--
``(A) Payment amount.--The Secretary shall
establish a payment amount under section 1848
with respect to screening colonoscopy for
individuals at high risk for colorectal cancer
(as determined in accordance with criteria
established by the Secretary) provided for the
purpose of early detection of colon cancer that
is consistent with payment amounts under such
section for similar or related services, except
that such payment amount shall be established
without regard to subsection (a)(2)(A) of such
section.
``(B) Frequency limit.--Subject to revision
by the Secretary under paragraph (4), no
payment may be made under this part for a
screening colonoscopy for individuals at high
risk for colorectal cancer provided to an
individual for the purpose of early detection
of colon cancer if the procedure is performed
within the 47 months following the month in
which a previous screening colonoscopy was
performed.
``(C) Factors considered in establishing
criteria for determining individuals at high
risk.--In establishing criteria for determining
whether an individual is at high risk for
colorectal cancer for purposes of this
paragraph, the Secretary shall take into
consideration family history, prior experience
of cancer, a history of chronic digestive
disease condition, and the presence of any
appropriate recognized gene markers for
colorectal cancer.
``(4) Revision of frequency.--
``(A) Review.--The Secretary shall review
periodically the appropriate frequency for
performing screening fecal-occult blood tests,
screening flexible sigmoidoscopies, and
screening colonoscopy based on age and such
other factors and the Secretary believes to be
pertinent.
``(B) Revision of frequency.--The Secretary,
taking into consideration the review made under
clause (i), may revise from time to time the
frequency with which such tests and procedures
may be paid for under this subsection.''.
(b) Conforming Amendments.--
(1) Section 1833(a).--Paragraphs (1)(D) and (2)(D) of
section 1833(a) (42 U.S.C. 13951(a)) are each amended
by striking ``subsection (h)(1),'' and inserting
``subsection (h)(1) or section 1834(d)(1),''.
(2) Section 1848(a)(2)(A).--Clauses (i) and (ii) of
section 1848(a)(2)(A) (42 U.S.C. 13951(a)(2)(A)) are
each amended by striking ``a service'' and inserting
``a service (other than a screening flexible
sigmoidoscopy provided to an individual for the purpose
of early detection of colon cancer or a screening
colonoscopy provided to an individual at high risk for
colorectal cancer for the purpose of early detection of
colon cancer)''.
(3) Section 1862(a).--Section 1862(a) (42 U.S.C.
1395y(a)) is amended--
(A) in paragraph (1)--
(i) by striking ``and'' at the end of
subparagraph (E),
(ii) by striking the semicolon at the
end of subparagraph (F) and inserting
``and'', and
(iii) by adding at the end the
following:
``(G) in the case of screening fecal-occult
blood tests, screening flexible
sigmoidoscopies, and screening colonoscopy
provided for the purpose of early detection of
colon cancer, which are performed more
frequently than is covered under section
1834(d);'', and
(B) in paragraph (7), by striking ``paragraph
(1)(B) or under paragraph (1)(F)'' and
inserting ``subparagraphs (B), (F), or (G) of
paragraph (1)''.
(c) Effective Date.--The amendments made by the preceding
subsections apply to services furnished on or after January 1,
1996.
SEC. 11131. PAYMENTS FOR VACCINES AND VACCINE ADMINISTRATION.
(a) Payment Amounts for the Administration of Certain
Vaccines.--
(1) In general.--Section 1833(k) (42 U.S.C. 13951(k))
is amended to read as follows:
``(k) Payment Amount for Certain Vaccines.--
``(1) In general.--The payment amount under this part
for the administration of a vaccine described in
section 1861(s)(10) shall be equal to--
``(A)(i) for a vaccine administered in 1996
not in connection with the furnishing of
another service, $9.00, and
``(ii) for a vaccine administered in 1996 in
connection with the furnishing of another
service, $4.00, and
``(B) for a vaccine administered in any
subsequent year, the amount determined under
subparagraph (A), or under this subparagraph,
for the previous year, increased by the update
under section 1848(d)(3) for that subsequent
year for physicians' services (described in
section 1848(d)(3)(A)(ii)(I)).
``(2) Cross reference.--For a limitation on actual
charges for items and services described in section
1861(s)(10), see paragraphs (1) and (2) of section
1848(g).''.
(2) Conforming amendment to section 1832(a)(1).--
Section 1832(a)(1) (42 U.S.C. 1395k(a)(1)) is amended
by striking ``and (D)'' and inserting ``, (D), and
(K)''.
(3) Conforming amendments to section 1832(a)(2).--
Section 1832(a)(2) (42 U.S.C. 1395k(a)(2)) is amended--
(A) in subparagraph (B), by striking
``described in subparagraph (G) or subparagraph
(I)'' and inserting ``or services described in
subparagraph (G), (I), or (K)'',
(B) in subparagraph (D), by inserting before
the semicolon the following: ``, other than, in
either case, services described in subparagraph
(K)'',
(C) in subparagraph (H), by inserting before
the semicolon the following: ``, other than
services described in subparagraph (K)'',
(D) in subparagraph (I), by striking the
final ``and'',
(E) in subparagraph (J), by striking the
period and adding ``; and'', and
(F) by adding at the end the following:
``(K) administration of vaccines by providers
of services, or as rural health clinic or
Federally qualified health center services.''.
(4) Conforming amendments to section 1833(a)(1).--
Section 1833(a)(1)(B) (42 U.S.C. 13951(a)(1)(B)) is
amended--
(A) by striking ``items and services
described'' and inserting ``vaccines listed'',
and
(B) by inserting at the end the following:
``and, with respect to the administration of
those vaccines, the amounts described in
subsection (k)(1),''
(5) Conforming amendments to section 1833(a)(2).--
Section 1833(a)(2) (42 U.S.C. 13951(a)(2)) is amended--
(A) in the matter preceding subparagraph (A),
by striking ``and (I)'' and inserting ``, (I),
and (K)'', and
(B) in the matter in subparagraph (A)
preceding clause (i), by striking ``items and
services described'' and inserting ``vaccines
listed''.
(6) Conforming amendment to section 1833(a)(3).--
Section 1833(a)(3) (42 U.S.C. 13951(a)(3)) is amended
by striking ``items and services described'' and
inserting ``vaccines listed''.
(7) Conforming amendments to section 1833(a)(6).--
Section 1833(a)(6) (42 U.S.C. 13951(a)(6)) is amended--
(A) by inserting ``other than services
described in section 1832(a)(2)(K)'' after
``services'', and
(B) by striking ``and''.
(8) Conforming amendment to section 1833(a)(7).--
Section 1833(a)(7) (42 U.S.C. 13951(a)(7)) is amended
by striking the period and adding at the end ``; and''.
(9) Cross reference.--Section 1833(a) (42 U.S.C.
13951(a)) is amended by adding at the end the
following:
``(8) in the case of services described in section
1832(a)(2)(k), the amount described in subsection
(k)(1).''.
(10) Conforming amendment to section 1834(g).--
Section 1834(g)(2) (42 U.S.C. 1395m(g)(2)) is amended
by inserting ``(other than services described in
section 1832(a)(2)(K))'' after ``hospital services''.
(11) Conforming amendments to section 1842(b).--
(A) Initial matter in paragraph (3)(b).--The
matter in section 1842(b)(3)(B) (42 U.S.C.
1395u(b)(3)(B)) preceding clause (i) is amended
by inserting ``, where payment under this part
for a service is on a basis other than a cost
basis,'' after ``carrier, and''.
(B) Paragraph (3)(b)(ii).--Section
1842(b)(3)(B)(ii)(I) (42 U.S.C.
1395u(b)(3)(B)(ii)(I)) is amended by inserting
``(or other payment basis)'' after ``reasonable
charge''.
(12) Conforming amendments to section 1848(g).--
(A) Paragraph (1).--The first sentence of
section 1848(g)(1) (42 U.S.C. 1395w-4(g)(1)) is
amended by inserting ``or items and services
described in section 1861(s)(10)'' after
``January 1, 1991)''.
(B) Paragraph (2).--Section 1848(g)(2)(C) (42
U.S.C. 1395w-4(g)(2)(C)) is amended by adding
at the end the following: ``For items and
services described in section 1861(s)(10)
furnished in a year after 1994, the `limiting
charge' shall be 115 percent of the applicable
amount described in section 1833(k)(1).''.
(b) Elimination of Coinsurance and Deductible for Hepatitis
B Vaccine.--Section 1833(a)(1)(B) (42 U.S.C. 13951(a)(1)(B)),
the matter in subparagraph (A) of section 1833(a)(2) (42 U.S.C.
13951(a)(2)) preceding clause (i), section 1833(a)(3) (42
U.S.C. 13951(a)(3)), paragraph (1) of the first sentence of
section 1833(b) (42 U.S.C. 13951(b)), and the third sentence of
section 1866(a)(2)(A) (42 U.S.C. 1395cc(a)(2)(A)) are each
amended by striking ``1861(s)(10)(A)'' and inserting
``1861(s)(10)''.
(c) Repeal of Obsolete Provisions.--
(1) Social security act.--Section 1861(s)(10)(A) (42
U.S.C. 1395x(s)(10)(A)) is amended by striking ``,
subject to section 4071(b) of the Omnibus
Reconciliation Act of 1987,''.
(2) OBRA-1987.--Section 4071(b) of the Omnibus Budget
Reconciliation Act of 1987 is repealed.
PART 3--PROVISIONS RELATING TO PARTS A AND B
SEC. 11141. CENTERS OF EXCELLENCE.
(a) In General.--Title XVIII is amended by inserting after
section 1888 the following:
``SEC. 1889. CENTERS OF EXCELLENCE.
``(a) In General.--The Secretary shall use a competitive
process to contract with centers of excellence for cataract
surgery, coronary artery by-pass surgery, and such other
services as the Secretary determines to be appropriate. Payment
under this title shall be made for services subject to such
contracts on the basis of negotiated or all-inclusive rates as
follows:
``(1) Coverage of urban area.--The center shall cover
services provided in an urban area (as defined in
section 1886(d)(2)(D)) for years beginning with fiscal
year 1996.
``(2) Savings required.--The amount of payment made
by the Secretary to the center under this title for
services covered under the project shall be less than
the aggregate amount of the payments that the Secretary
would have made to the center for such services had the
project not been in effect.
``(3) Types of services.--The Secretary shall make
payments to the center on such a basis for the
following services furnished to individuals entitled to
benefits under this title:
``(A) Facility, professional, and related
services relating to cataract surgery.
``(B) Coronary artery bypass surgery and
related services.
``(C) Such other services as the Secretary
and the center may agree to cover under the
agreement.
``(b) Rebate of Portion of Savings.--In the case of any
services furnished by a center under subsection (a), the
Secretary shall make a payment to each individual to whom such
services are furnished at such time and in such manner as the
Secretary may provide, in an amount equal to 10 percent of the
amount by which--
``(1) the amount of payment that would have been made
by the Secretary under this title to the center for
such services if the services had not been provided at
the center, exceeds
``(2) the amount of payment made by the Secretary
under this title to the center for such services.''.
(b) Effective Date.--The amendments made by subsection (a)
apply to services furnished on or after October 1, 1996.
SEC. 11142. MAINTAINING SAVINGS RESULTING FROM TEMPORARY FREEZE ON
PAYMENT INCREASES FOR HOME HEALTH SERVICES.
(a) Basing Updates to Per Visit Cost Limits on Limits for
Fiscal Year 1993.--Section 1861(v)(1)(L)(iii) (42 U.S.C.
1395x(v)(1)(L)(iii)) is amended by adding at the end the
following sentence: ``In establishing limits under this
subparagraph, the Secretary may not take into account any
changes in the costs of the provision of services furnished by
home health agencies with respect to cost reporting periods
which began on or after July 1, 1994, and before July 1,
1996.''.
(b) No Exceptions Permitted Based on Amendment.--The
Secretary of Health and Human Services shall not consider the
amendment made by subsection (a) in making any exemptions and
exceptions pursuant to section 1861(v)(1)(L)(ii) of the Social
Security Act.
SEC. 11143. INTERIM PAYMENTS FOR HOME HEALTH SERVICES.
(a) Reductions in Cost Limits.--Section 1861(v)(1)(L)(i)
(42 U.S.C. 1395x(v)(1)(L)(i)) is amended--
(1) by inserting ``and before October 1, 1996,''
after ``July 1, 1987'' in subclause (III),
(2) by striking the period at the end of the matter
following subclause (III), and inserting ``, and'', and
(3) by adding at the end the following new subclause:
``(IV) October 1, 1996, 105 percent of the median of
the labor-related and nonlabor per visit costs for
freestanding home health agencies.''.
(b) Delay in Updates.--Section 1861(v)(1)(L)(iii) (42
U.S.C. 1395x(v)(1)(L)(iii)) is amended by striking ``July 1,
1996'' and inserting ``October 1, 1996''.
(c) Additions to Cost Limits.--Section 1861(v)(1)(L) (42
U.S.C. 1395x(v)(1)(L)) is amended by adding at the end the
following:
``(iv) Limits for fiscal years 1997
through 1999.--For services furnished
by home health agencies for cost
reporting periods beginning on or after
October 1, 1996, but before October 1,
1999, the Secretary shall provide for
an interim system of limits. Payment
shall be the lower of--
``(I) costs determined under
the preceding provisions of
this subparagraph, or
``(II) an agency-specific per
beneficiary annual limitation
calculated from the agency's
12-month cost reporting period
ending on or after January 1,
1994, and on or before December
31, 1994, based on reasonable
costs (including nonroutine
medical supplies), updated by
the home health market basket
index. The per beneficiary
limitation shall be multiplied
by the agency's unduplicated
census count of patients
(entitled to benefits under
this title) for the year
subject to the limitation to
determine the aggregate agency
specific per beneficiary
limitation.
``(v) Special rules.--For services
furnished by home health agencies for
cost reporting periods beginning on or
after October 1, 1996, the following
rules shall apply:
``(I) For new providers and
those providers without a 12-
month cost reporting period
ending in calendar year 1994,
the per beneficiary limitation
shall be equal to the mean of
these limits (or the
Secretary's best estimates
thereof) applied to home health
agencies as determined by the
Secretary. Home health agencies
that have altered their
corporate structure or name
shall not be considered new
provides for payment purposes.
``(II) For beneficiaries who
use services furnished by more
than one home health agency,
the per beneficiary limitations
shall be prorated among
agencies.
``(vi) Bonus payments.--Home health
agencies whose cost or utilization
experience is below 125 percent of the
mean national or census region
aggregate per beneficiary cost or
utilization experience for 1994, or
best estimates thereof, and whose year-
end reasonable costs are below the
agency-specific per beneficiary
limitation, shall receive payments
equal to 50 percent of the difference
between the agency's reasonable costs
and its limit for fiscal years 1997,
1998, and 1999. Such payments may not
exceed 5 percent of such agency's
aggregate Medicare reasonable cost in a
year.
``(vii) Modifications for regional or
national variations in utilization.--
Effective January 1, 1997, or as soon
as feasible, the Secretary shall modify
the agency-specific per beneficiary
annual limitation described in clause
(iv) to provide for regional or
national variations in utilization. For
purposes of determining payment under
clause (iv), the limit shall be
calculated through a blend of 75
percent of the agency-specific cost or
utilization experience in 1994 with 25
percent of the national or census
region cost or utilization experience
in 1994, or the Secretary's best
estimates thereof.''.
(d) Use of Interim Final Regulations.--The Secretary shall
implement the payment limits described in section
1861(v)(1)(L)(iv) of the Social Security Act by publishing in
the Federal Register a notice of interim final payment limits
by August 1, 1996, and allowing for a period of public comment
thereon. Payments subject to these limits will be effective for
cost reporting periods beginning on or after October 1, 1996,
without the necessity for consideration of comments received,
but the Secretary shall, by Federal Register notice, affirm or
modify the limits after considering those comments.
(e) Development of Case Mix System.--The Secretary shall
expand research on a prospective payment system for home health
agencies that shall tie prospective payments to an episode of
care, including an intensive effort to develop a reliable case
mix adjuster that explains a significant amount of the
variances in costs.
(f) Submission of Data for Case Mix System.--Effective for
cost reporting periods beginning on or after October 1, 1998,
the Secretary may require all home health agencies to submit
such additional information as the Secretary deems necessary
for the development of a reliable case mix system.
SEC. 11144. PROSPECTIVE PAYMENT FOR HOME HEALTH SERVICES.
Title XVIII is amended by adding at the end the following:
``SEC. 1893. PROSPECTIVE PAYMENT FOR HOME HEALTH SERVICES.
``(a) In General.--Notwithstanding section 1861(v), the
Secretary shall, for cost reporting periods beginning on or
after October 1, 1999, provide for payments for home health
services in accordance with a prospective payment system, which
pays home health agencies on a per episode basis, established
by the Secretary.
``(b) Elements of System.--Such a system shall include the
following:
``(1) Based on a per episode amount.--All services
covered and paid on a reasonable cost basis under the
medicare home health benefit as of the date of the
enactment of the Balanced Budget Act of 1995 for
Economic Growth and Fairness, including medical
supplies, shall be subject to the per episode amount.
In defining an episode of care, the Secretary shall
consider an appropriate length of time for an episode,
the use of services, and the number of visits provided
within an episode, potential changes in the mix of
services provided within an episode and their cost, and
a general system design that will provide for continued
access to quality services. The per episode amount
shall be based on the most current audited cost report
data available to the Secretary
``(2) Use of case mix.--The Secretary shall employ an
appropriate case mix adjustment that explains a
significant amount of the variation in cost.
``(3) Annual adjustments.--The episode payment amount
shall be adjusted annually by the home health market
basket index. The labor portion of the episode amount
shall be adjusted for geographic differences in labor-
related costs based on the most current hospital wage
index.
``(4) Outliers.--The Secretary may designate a
payment provision for outliers, recognizing the need to
adjust payments due to unusual variations in the type
or amount of medically necessary care.
``(5) Coordination by home health agency.--A home
health agency shall be responsible for coordinating all
care for a beneficiary. If a beneficiary elects to
transfer to, or receive services from, another home
health agency within an episode period, the episode
payment shall be prorated between home health agencies.
``(c) Savings.--Prior to implementing the prospective
system described in subsections (a) and (b) in a budget neutral
fashion, the Secretary shall first reduce, by 15 percent, the
cost limits, per beneficiary limits, and actual costs,
described in section 1861(v)(1)(L)(iv), as such limits are in
effect on September 30, 1999.''.
SEC. 11145. PAYMENT BASED ON LOCATION WHERE HOME HEALTH SERVICE IS
FURNISHED.
(a) Conditions of Participation.--Section 1891 (42 U.S.C.
1395bbb) is amended by adding at the end the following:
``(g) Payment on Basis of Location of Service.--A home
health agency shall submit claims for payment of home health
services under this title only on the basis of the geographic
location at which the service is furnished, as determined by
the Secretary.''.
(b) Wage Adjustment.--Section 1861(v)(1)(L)(iii) (42 U.S.C.
1395x(v)(1)(L)(iii)) is amended by striking ``agency is
located'' and inserting ``service is furnished''.
(c) Effective Date.--The amendments made by previous
subsections apply to services furnished on or after October 1,
1996.
SEC. 11146. ELIMINATION OF PERIODIC INTERIM PAYMENTS FOR HOME HEALTH
AGENCIES.
(a) In General.--Section 1815(e)(2) (42 U.S.C. 1395g(e)(2))
is amended--
(1) by inserting ``and'' at the end of subparagraph
(C),
(2) by striking subparagraph (D), and
(3) by redesignating subparagraph (E) as (D).
(b) Effective Date.--The amendments made by subsection (a)
apply to payments made on or after October 1, 1999.
SEC. 11147. ESTABLISHMENT OF POST-HOSPITAL HOME HEALTH BENEFIT UNDER
PART A AND TRANSFER OF OTHER HOME HEALTH SERVICES
TO PART B.
(a) In General.--Section 1812(a)(3) (42 U.S.C. 1395d(a)(3))
is amended--
(1) by inserting ``post-hospital'' before ``home
health services'', and
(2) by inserting ``for up to 100 visits during any
spell of illness (or, in the case of an individual who
is not enrolled in the insurance program established by
part B, home health services)'' before the semicolon.
(b) Post-Hospital Home Health Services.--Section 1861 (42
U.S.C. 1395x), as amended by section 11118, is further amended
by adding at the end the following:
``(pp) Post-Hospital Home Health Services.--The term `post-
hospital home health services' means home health services
furnished to an individual under a plan of treatment
established when the individual was an inpatient of a hospital
or rural primary care hospital for not less than 3 consecutive
days before discharge, if home health services are initiated
for such individual within 30 days after discharge from the
hospital or rural primary care hospital.''.
(c) Conforming Amendments.--Section 1812(b) (42 U.S.C.
1395d(b)) is amended--
(1) by striking ``or'' at the end of paragraph (2);
(2) by striking the period at the end of paragraph
(3) and inserting ``; or'', and
(3) by adding at the end the following:
``(4) post-hospital home health services furnished to
the individual during such spell of illness after such
services had been furnished to the individual for 100
visits during such spell.''.
(d) Clarification of Part-Time or Intermittent Nursing
Care.--Section 1861(m) (42 U.S.C. 1395x(m)) is amended by
adding at the end the following: ``For purposes of paragraphs
(1) and (4), the term `part-time or intermittent services'
means skilled nursing and home health aide services furnished
any number of days per week as long as they are furnished
(combined) less than 8 hours each day and 28 or less hours each
week (or, subject to review on a case-by-case basis as to the
need for care, less than 8 hours each day and 35 or less hours
per week). For purposes of sections 1814(a)(2)(C) and
1835(a)(2)(A), `intermittent' means skilled nursing care that
is either provided or needed on fewer than 7 days each week, or
less than 8 hours or each day of skilled nursing and home
health services combined for periods of 21 days or less (with
extensions in exceptional circumstances when the need for
additional care is finite and predictable).''.
(e) Payments Under Part B.--Subparagraph (A) of section
1833(a)(2) (42 U.S.C. 13951(a)(2)) is amended to read as
follows:
``(A) with respect to home health services
(other than a covered osteoporosis drug (as
defined in section 1861(kk)), and to items and
services described in section 1861(s)(10)(A),
the amounts determined under section
1861(v)(1)(L) or section 1893, or, if such
services are furnished by a public provider of
services, or by another provider which
demonstrates to the satisfaction of the
Secretary that a significant portion of its
patients are low-income (and requests that
payment be made under this provision), free of
charge or at nominal charges to the public, the
amount determined in accordance with section
1814(b)(2);''.
(f) Exclusion of Additional Part B Costs From Determination
of Part B Monthly Premium.--Section 1839(a) (42 U.S.C.
1395r(a)) is amended--
(A) in the second sentence of paragraph (1), by
inserting ``(except as provided in paragraph (5))''
before the period, and
(B) by adding at the end the following:
``(5) Exclusion of Home Health Costs.--In estimating the
benefits and administrative costs which will be payable from
the Federal Supplementary Medical Insurance Trust Fund for a
year (beginning with 1997), the Secretary shall exclude an
estimate of any benefits and administrative costs attributable
to home health services for which payment would have been made
under part A during the year but for paragraph (4) of section
1812(b), or home health services furnished under part A that
are not post-hospital home health services.''
(g) Payments From Supplementary Medical Insurance Trust
Fund for Certain Home Health Services Furnished Under Part A.--
Section 1815(a) (42 U.S.C. 1395g(a)) is amended by inserting
after ``Trust Fund'' the following: ``or in the case of home
health services that are not post-hospital home health
services, from the Federal Supplementary Medical Insurance
Trust Fund)''.
(h) Effective Date.--The amendments made by the preceding
subsections apply to spells of illness beginning on or after
October 1, 1996.
SEC. 11148. PERMANENT EXTENSION OF CERTAIN SECONDARY PAYER PROVISIONS.
(a) Working Disabled.--Section 1862(b)(1)(B) is amended by
striking clause (iii).
(b) Individual With End Stage Renal Disease.--Section
1862(b)(1)(C) is amended--
(1) in the first sentence, by striking ``12-month''
each place it occurs and inserting ``18-month'', and
(2) by striking the second sentence.
(c) IRS-SSA-HCFA Data Match.--
(1) Social security act.--Section 1862(b)(5)(C) is
amended by striking clause (iii).
(2) Internal revenue code.--Section 6103(l)(12) of
the Internal Revenue Code of 1986 is amended by
striking subparagraph (F).
PART 4--MEDICARE PART B PREMIUM
SEC. 11161. PART B PREMIUM.
(a) In General.--The first and second sentences of section
1839(a)(3) (42 U.S.C. 1395r(a)(3)) are amended to read as
follows: ``The Secretary shall, during September of each year,
determine and promulgate a monthly premium rate for the
succeeding calendar year. That monthly premium rate shall be
equal to 50 percent of the monthly actuarial rate for enrollees
age 65 and over, determined according to paragraph (1), for
that succeeding calendar year.''.
(b) Conforming and Technical Amendments.--Section 1839 (42
U.S.C. 1395r) is amended--
(1) in subsection (a)(2), by striking ``(b) and (e)''
and inserting ``(b), (c), and (f)'',
(2) in the third sentence of subsection (a)(3)--
(A) by inserting ``rate'' after ``premium'',
and
(B) by striking ``and the derivation of the
dollar amounts specified in this paragraph'',
(3) by striking subsection (e), and
(4) by redesignating subsection (g) and (e) and
inserting that subsection after subsection (d).
(c) Effective Date.--The amendments made by the preceding
subsections apply to premiums for months after December 1995.
Subtitle B--Expanded Medicare Choice
SEC. 11201. EXPANDED CHOICE UNDER MEDICARE.
(a) In General.--Title XVIII (42 U.S.C. 1395 et seq.) is
amended by inserting after section 1804 the following:
``option to enroll in managed care plans
``Sec. 1805. Every individual entitled to benefits under
part A and enrolled under part B or enrolled under part B only
shall be eligible to enroll under part C with any eligible
organization with which the Secretary has entered into a
contract under part C and which serves the geographic area in
which the individual resides.''.
(b) Effective Date.--The amendment made by subsection (a)
applies to enrollments whose periods begin after 1996.
SEC. 11202. BROADER CHOICE AMONG MANAGED CARE ORGANIZATIONS.
(a) In General.--Title XVIII (42 U.S.C. 1395 et seq.) is
amended--
(1) by redesignating part C (42 U.S.C. 1395x et seq.)
as part D, and
(2) by inserting after part B (42 U.S.C. 1395j et
seq.) the following:
``PART C--MANAGED CARE ORGANIZATIONS
``SEC. 1851A. TYPES OF MANAGED CARE ORGANIZATIONS.
``(a) Eligible Organizations.--For purposes of this part,
the term `eligible organization' means a public or private
entity, organized under the laws of any State, that is--
``(1) a qualified health maintenance organization
(QHMO),
``(2) a competitive medical plan (CMP),
``(3) a preferred provider organization (PPO), or
``(4) a provider sponsored organization (PSO).
``(b) Qualified Health Maintenance Organization (QHMO).--
For purposes of this part, the term `qualified health
maintenance organization' means such as organization (as
defined in section 1310(d) of the Public Health Service Act)
that meets the requirements of subparagraphs (B) and (E) of
subsection (c)(1).
``(c) Competitive Medical Plan (CMP).--
``(1) In general.--For purposes of this part, the
term `competitive medical plan' means an entity that
meets the following requirements:
``(A) Minimum services to all members.--The
entity provides to enrolled members at least
the following health care services:
``(i) Physicians' services performed
by physicians (as defined in section
1861(r)(1)).
``(ii) Inpatient hospital services.
``(iii) Laboratory, X-ray, emergency,
and preventive services.
``(iv) Out-of-area coverage.
``(B) Provision of physicians' services.--The
entity provides physicians' services primarily
(i) directly through physicians who are either
employees or partners of such organization, or
(ii) through contracts with individual
physicians or one or more groups of physicians
(organized on a group practice or individual
practice basis).
``(C) Compensation on prepaid risk basis.--
The entity is compensated (except for
deductibles, coinsurance, and copayments) for
the provision of health care services to
enrolled members by a payment which is paid on
a periodic basis without regard to the date the
health care services are provided and which is
fixed without regard to the frequency, extent,
or kind of health care service actually
provided to a member.
``(D) Assumption of risk.--The entity assumes
full financial risk on a prospective basis for
the provision of the health care services
listed in subparagraph (A), except that such
entity may--
``(i) obtain insurance or make other
arrangements for the cost of providing
to any enrolled member health care
services listed in subparagraph (A) the
aggregate value of which exceeds $5,000
in any year,
``(ii) obtain insurance or make other
arrangements for the cost of health
care services listed in subparagraph
(A) provided to its enrolled members
other than through the entity because
medical necessity required their
provision before they could be secured
through the entity,
``(iii) obtain insurance or make
other arrangements for not more than 90
percent of the amount by which its
costs for any of its fiscal years
exceed 115 percent of its income for
such fiscal year, and
``(iv) make arrangements with
physicians or other health
professionals, health care
institutions, or any combination of
such individuals or institutions to
assume all or part of the financial
risk on a prospective basis for the
provision of basic health services by
the physicians or other health
professionals or through the
institutions.
``(E) Fiscal soundness; provision against
insolvency.--The entity meets standards for
fiscal soundness (including standards for
provision against the risk of insolvency)
applicable to Federally qualified health
maintenance organizations under title XIII of
the Public Health Service Act.
``(2) Exception for certain grandfathered
contracts.--Paragraph (1)(A)(ii) shall not apply to an
entity which had contracted with a single State agency
administering a State plan approved under title XIX for
the provision of services (other than inpatient
hospital services) to individuals eligible for such
services under such State plan on a prepaid risk basis
prior to 1970.
``(d) Preferred Provider Organization (PPO).--
``(1) In general.--For purposes of this part, the
term `preferred provider organization' means an entity
that meets the following requirements:
``(A) Minimum services to all members.--The
entity provides at least physicians' services
performed by physicians (as defined in section
1861(r)(1)).
``(B) Provision of physician services; fiscal
soundness.--The entity meets the requirements
of subparagraphs (B) and (E) of subsection
(c)(1).
``(C) Assumption of risk.--The entity meets
the requirements of subsection (c)(1)(D) with
respect to members enrolled with the
organization under this part.
``(2) Determination of private membership.--In
applying the provisions of sections 1851E(g) and
1851F(e)(1)(B)(i) and (f)(1)(B)(i) (concerning minimum
private enrollment) to an organization that meets the
requirements of paragraph (1), individuals for whom the
organization has assumed substantial financial risk
shall be considered to be members of the organization.
``(e) Provider Sponsored Organization (PSO).--
``(1) In general.--For purposes of this part, the
term `provider sponsored organization' means an entity
that meets the following requirements:
``(A) Type of entity.--The entity is a
hospital, a group of affiliated hospitals, or
an affiliated group consisting of a hospital or
hospitals and physicians (as defined in section
1861(r)(1)).
``(B) Minimum Services to all members.--The
entity provides at least physicians' services
performed by physicians (as defined in section
1861(r)(1)) and inpatient hospital services.
``(C) Direct provision of services.--The
entity provides directly a substantial portion
of the services covered under this title (as
determined by the Secretary, which may vary for
rural or under served areas).
``(D) Assumption of risk.--The entity meets
the requirements of subsection (c)(1)(D) with
respect to members enrolled with the
organization under this part.
``(E) Fiscal soundness; provision against
insolvency.--The entity meets requirements for
fiscal soundness and provision against
insolvency developed by the Secretary.
``(2) Determination of private membership.--In
applying the provisions of sections 1851E(g) and
1851F(e)(1)(B)(i) and (f)(1)(B)(i) (concerning minimum
private enrollment) to an organization that meets the
requirements of paragraph (1), individuals for whom the
organization has assumed substantial financial risk
shall be considered to be members of the organization.
``(3) Limited preemption of state law.--Except as
otherwise provided in the next sentence, an
organization that meets the requirements of paragraph
(1) may provide health benefits to individuals enrolled
with the organization under this part without regard to
any State law that imposes requirements different from
those under paragraph (1)(E)) (concerning fiscal
soundness and provision against insolvency), or that
imposes requirements (in other respects) that differ
from those imposed on other organizations which provide
health care benefits only through (or preferentially
through) certain entities. If the Secretary determines
that a State has licensing standards which are
substantially equivalent to the requirements of such
paragraph (1)(E), that the State has a process for
issuing licenses on a timely basis, and that the State
does not impose requirements (in other respects) that
differ from those imposed on other organizations which
provide health care benefits only through (or
preferentially through) certain entities, the Secretary
shall require the organization to obtain a license from
the State.
``SEC. 1851B. ENROLLMENT AND DISENROLLMENT.
``(a) In General.--
``(1) Secretary's responsibility.--The Secretary
shall carry out enrollment and termination of
enrollment of individuals with eligible organizations.
``(2) Individual options.--An individual may, as
prescribed by regulations--
``(A) enroll under this part with an eligible
organization; and
``(B) terminate enrollment with such
organization--
``(i) as of the beginning of the
first calendar month following the date
on which the request is made for such
termination;
``(ii) as of the date determined in
accordance with regulations, in the
case of financial insolvency of the
organization; and
``(iii) retroactively to the date of
enrollment, in such special
circumstances as the Secretary may
designate.
``(b) Information Concerning Enrollment.--
``(1) Standardized comparative materials.--The
Secretary shall develop and distribute standardized
comparative materials about eligible organizations and
medicare supplemental policies (as defined in section
1882(g)(1)) to enable individuals to compare benefits,
costs, and quality indicators.
``(2) Cost-sharing by participating organizations.--
Each eligible organization with a contract under this
part shall pay the Secretary for its pro rata share (as
determined by the Secretary) of the estimated costs to
be incurred by the Secretary in carrying out the
requirements of the preceding sentence, the first
sentence of subsection (a)(1), and section 4360 of the
Omnibus Reconciliation Act of 1990. Those payments are
appropriated to defray the costs described in the
preceding sentence, to remain available until expended.
``(2) Review of marketing materials.--The Secretary
may prescribe the procedures and conditions under which
an eligible organization that has entered into a
contract with the Secretary under this subsection may
furnish information about the organization to enrollees
and individuals eligible to enroll under this part. No
brochures, application forms, or other promotional or
informational material may be distributed by an
organization to (or for the use of) such individuals
unless at least 45 days before its distribution, the
organization has submitted the material to the
Secretary for review, and the Secretary has not
disapproved the distribution of the material. The
Secretary shall review all such material submitted and
shall disapprove such material if the Secretary
determines, in the Secretary's discretion, that the
material is materially inaccurate or misleading or
otherwise makes a material misrepresentation.
``(c) Periods of Enrollment.--
``(1) Standard enrollment opportunities.--Subject to
the provisions of this section, an organization with a
contract under this part shall permit enrollment under
this part by any individual--
``(A) during the month of each year specified
by the Secretary for all eligible
organizations;
``(B) during the individual's initial
enrollment period in the program under part B
(as described in section 1837(d));
``(C) during a special enrollment period in
the program under part B (for individuals
formerly electing employment-based coverage)
described in section 1837(i)(3); and
``(D) during the 90-day period beginning 30
days before the date the individual takes up
residence in the service area of the
organization.
``(2) Special enrollment period for individuals
losing coverage by another organization.--
``(A) In general.--Subject to other
provisions of this section, if a contract with
an organization under this part is not renewed
or otherwise terminated, or is renewed in a
manner that discontinues coverage for
individuals residing in part of the service
area, each other organization with a contract
under this part shall permit enrollment under
this part by affected individuals enrolled with
such other organization on the effective date
of such termination or discontinuation of
coverage.
``(B) Enrollment period.--The enrollment
period required by subparagraph (A) shall be
for 30 days and shall begin 30 days after the
date that the Secretary provides notice of such
requirement.
``(2) Acceptance or denial of application.--An
eligible organization shall enroll individuals under
this part in the order of application, and may deny
enrollment of such an individual only if the
enrollment--
``(A) would exceed the limits of the
organization's capacity (as determined by the
Secretary);
``(B) would result in an enrolled population
substantially nonrepresentative, as determined
in accordance with regulations of the
Secretary, of the population in the geographic
area served by the organization; or
``(C) would result in the organization's
failing to meet the requirements of sections
1851E(g) and 1851F(e)(1)(B)(i) and (f)(1)(B)(i)
(concerning minimum private enrollment).
``(3) Effective date of enrollment.--An individual's
enrollment with an eligible organization under this
part shall be effective--
``(A) in the case of an enrollment under
paragraph (1)(A), on the first day of the third
month beginning after the end of the enrollment
period;
``(B) in the case of an enrollment under
paragraph (1)(B), as specified by section
1838(a);
``(C) in the case of an enrollment under
paragraph (1)(C), as specified by section
1838(e);
``(D) in the case of an enrollment under
paragraph (1)(D), on the first day of the first
month following the month in which the
individual enrolled; and
``(E) in the case of an enrollment under
paragraph (2), 30 days after the end of the
open enrollment period, or, if the Secretary
determines that such date is not feasible, such
other date as the Secretary specifies.
``(d) Enrollment or termination for health reasons
prohibited.--An eligible organization--
``(1) shall not refuse to enroll, and shall not expel
or refuse to re-enroll, any individual eligible to
enroll or enrolled with the organization under this
part because of the individual's health status or
requirements for health care services;
``(2) shall include in any marketing materials a
statement of the requirements of paragraph (1); and
``(3) shall notify each such individual of the
requirements of paragraph (1) at the time of the
individual's enrollment.
``SEC. 1851C. BENEFITS.
``(a) Basic Benefits.--
``(1) In general.--An eligible organization must
provide to members enrolled under this part, either
directly or through providers and other persons that
meet the applicable requirements of this title and part
A of title XI--
``(A) services covered under parts A and B of
this title, for those members entitled to
benefits under part A and enrolled under part
B, or
``(B) services covered under part B, for
those members enrolled only under such part,
which are available to individuals residing in the
geographic area served by the organization.
``(2) PPO required to afford `point of service'
option.--An eligible organization that contracts as a
preferred provider organization under this part, in
addition to providing services in accordance with
paragraph (1), shall also pay for any service furnished
to a member enrolled under this part (in the amounts,
if any, that otherwise would be paid under this title)
by any entity that may furnish that service under this
title (other than an entity through which the
organization provides services, or other than a service
with respect to which the organization is required to
provide for reimbursement under subsection (h)(2)
(concerning urgently needed services provided outside
the organization).
``(3) PSO prohibited from affording `point of
service' option.--An eligible organization that
contracts as a provider sponsored organization under
this part may not pay for any service described in
subsection (d) that is furnished to a number enrolled
under this part.
``(b) Additional Benefits or Other Adjustment Under Risk
Plans.--
``(1) Requirement where adjusted community rates
below payment rates.--Each contract under section
1851F(e) shall provide for adjustment in accordance
with this subsection, if--
``(A) the adjusted community rate for
services under parts A and B (as reduced for
the actual value of the coinsurance and
deductibles under those parts) for members
enrolled under this part with the organization
and entitled to benefits under part A and
enrolled in part B, or
``(B) the adjusted community rate for
services under part B (as reduced for the
actuarial value of the coinsurance and
deductibles under that part) for members
enrolled under this part B only is less than
the average of the per capita rates of payment
to be made under section 1851F(e)(2) at the
beginning of an annual contract period for
members enrolled under this part with the
organization and entitled to benefits under
part A and enrolled in part B, or enrolled in
part B only, respectively.
``(2) Selection by organization of additional
benefits.--An eligible organization to which paragraph
(1) applies shall either--
``(A) provide to members described in
paragraph (1)(A) or (1)(B), as applicable, the
additional benefits described in paragraph (3)
which are selected by the eligible organization
and which the Secretary finds are at least
equal in value to the difference between the
average per capita payment and the adjusted
community rate (as so reduced); or
``(B) elect an alternative, in accordance
with paragraph (4).
``(3) Additional benefits.--The additional benefits
referred to in paragraph (2) are--
``(A) the reduction of the premium rate or
other charges made with respect to services
furnished by the organization to members
enrolled under this part; or
``(B) the provision of additional health
benefits; or both.
``(4) Alternatives to additional benefits.--An
eligible organization to which paragraph (1) applies--
``(A) may elect to receive a lesser payment
such that there is no longer a difference
between the AAPCC and adjusted community rate
(as so reduced); and
``(B) may (with the approval of the
Secretary) provide that a part of the value of
such additional benefits be withheld and
reserved by the Secretary as provided in
paragraph (5).
``(5) Benefit stabilization fund.--An organization
having a contract under section 1851F(e) may (with the
approval of the Secretary) provide that a part of the
value of additional benefits otherwise required to be
provided by reason of paragraph (1) be withheld and
reserved in the Federal Hospital Insurance Trust Fund
and in the Federal Supplementary Medical Insurance
Trust Fund (in such proportions as the Secretary
determines to be appropriate) by the Secretary for
subsequent annual contract periods, to the extent
required to stabilize and prevent undue fluctuations in
the additional benefits offered in those subsequent
periods by the organization in accordance with
paragraph (3). Any of such value of additional benefits
which is not provided to members of the organization in
accordance with paragraph (3) prior to the end of such
period, shall revert for the use of such trust funds.
``(6) Determination of per capita rates.--If the
Secretary finds that there is insufficient enrollment
experience to determine an average of the per capita
rates of payment to be made under section 1851F(e)(2)
at the beginning of a contract period, the Secretary
may determine such an average based on the enrollment
experience of other contracts entered into under this
part.
``(c) Supplemental Benefits.--
``(1) Subject to secretary's approval.--An eligible
organization may provide to individuals enrolled under
this part (without affording such individuals an option
to decline such coverage), such additional health care
services as the Secretary may approve. The Secretary
shall approve any such additional services unless the
Secretary determines that including such additional
services will substantially discourage enrollment by
covered individuals with the organization.
``(2) At enrollees' option.--Such an organization may
provide to such individuals such additional health care
services as such individuals may elect, at their
option, to have covered.
``(3) Disclosure of premium.--Such an organization
shall furnish to such individuals information on the
portion of its premium rate or other charges applicable
to such additional services.
``(d) Standarized Packages of Additional Benefits.--Any
health care service described in subsection (b) or (c) that is
included in a standardized package of benefits specified by the
Secretary may be offered only as part of that standardized
package.
``(e) Availability and Accessibility of Services.--
``(1) Services provided through the organization.--An
eligible organization with a contract under this part
must make the services it has contracted to provide to
individuals enrolled with the organization under this
part--
``(A) available and accessible to each such
individual, within the area served by the
organization, with reasonable promptness and in
a manner with assures continuity, and
``(B) when medically necessary, available and
accessible twenty-four hours a day and seven
days a week.
``(2) Services provided outside the organization.--An
eligible organization with a contract under this part
must provide for reimbursement with respect to services
described in paragraph (1) provided to such an
individual other than through the organization, if--
``(A) the services were medically necessary
and immediately required because of an
unforeseen illness, injury, or condition; and
``(B) it was not reasonable given the
circumstances to obtain the services through
the organization.
``SEC. 1851D. LIABILITY OF BENEFICIARY AND THIRD PARTIES.
``(a) Limits on Liability for Required Benefits.--
``(1) Limitation to actuarial value of fee-for-
service coverage.--Total charges by an eligible
organization to individuals enrolled with the
organization under this part, with respect to services
described in section 1851C(a)--
``(A) shall include no amounts other than the
individual's share of premiums, deductibles,
coinsurance, and copayments; and
``(B) shall not exceed the actuarial value of
the deductibles and coinsurance that would be
applicable under this title on the average to
such individuals if they were not members of an
eligible organization.
``(2) Alternative data.--If the Secretary finds that
adequate data are not available for the determination
required under paragraph (1) with respect to an
eligible organization, the Secretary may substitute the
actuarial value of the deductibles and coinsurance
applicable on the average to individuals in the area,
in the State, or in the United States, eligible to
enroll under this part with the organization, or other
appropriate data.
``(b) Limits on Premium for Supplemental Benefits.--If an
eligible organization provides to its members enrolled under
this part supplemental benefits in accordance with section
1851C, the sum of--
``(1) the portion of such organization's premium rate
charged, with respect to such supplemental benefits, to
members enrolled under this part, and
``(2) the deductibles, coinsurance, and copayments
charged, with respect to such services to such members
shall not exceed the adjusted community rate for such
services.
``(c) Limitation on Amounts an Out-of-Plan Physician or
Other Entity May Collect.--
``(1) A physician or other entity (other than a
provider of services) that does not have a contract
establishing payment amounts for services furnished to
an individual enrolled under this part with an eligible
organization shall accept as payment in full for
services that are furnished to such an individual the
amounts that the physician or other entity could
collect if the indvidiual were not so enrolled. Any
penalty or other provision of law that applies to such
payments with respect to an individual entitled to
benefits under this title (but not enrolled with an
eligible organization under this part) shall also apply
with respect to an individual so enrolled.
``(2) For similar requirements applicable to
providers of services, see section 1866(a)(1)(O).
``(d) Plan as a Secondary Payer.--Notwithstanding any other
provision of law, an eligible organization may (in the case of
the provision of services for which the Medicare program is a
secondary payer under section 1862(b)(2)) charge or authorize
the provider of such services to charge, in accordance with the
charges allowed under such law or policy--
``(1) the insurance carrier, employer, or other
entity which under such law, plan, or policy is to pay
for the provision of such services, or
``(2) such member to the extent that the member has
been paid under such law, plan, or policy for such
services.
``SEC. 1851E. BENEFICIARY PROTECTIONS.
``(a) Explanation of Rights and Restrictions.--Each
eligible organization shall provide each enrollee, at the time
of enrollment and not less frequently than annually thereafter,
an explanation of the enrollee's rights under this part and
other important information, including the following:
``(1) Coverage.--The enrollee's rights to benefits
from the organization, and benefit limitations,
including--
``(A) out-of-area coverage provided by the
organization,
``(B) the organization's coverage of
emergency services and urgently needed care,
and
``(C) the restrictions on payments under this
title for services furnished other than by or
through the organization.
``(2) Termination of coverage.--An explanation that--
``(A) the organization may terminate or
refuse to renew the contract under this part;
and
``(B) termination of such contract could
result in termination of enrollment of
individuals with the organization.
``(3) Patient rights.--Safeguards on enrollees'
rights, including--
``(A) appeal rights of enrollees,
``(B) the right to be informed about various
treatment options, and
``(C) the right to decline treatment.
``(4) Emergencies.--The appropriate use of the 911
emergency telephone system in the case of medical
emergencies.
``(5) Fraud and abuse reporting.--The processes for
reporting potential fraud or abuse.
``(b) Notification of Termination Option in Marketing
Materials.--Each eligible organization with a contract under
this part shall include the information required by subsection
(a)(2) in any marketing materials described in section
1851B(b)(3) that are distributed by an eligible organization to
individuals eligible to enroll under this part with the
organization.
``(c) Grievance Mechanism.--An eligible organization with a
contract under this part must provide meaningful procedures for
hearing and resolving grievances between the organization
(including any entity or individual through which the
organization provides health care services) and members
enrolled with the organization under this part.
``(d) Coverage Determinations and Appeals.--
``(1) Determination by organization.--An eligible
organization with a contract under this part shall have
a procedure for determining whether an individual
enrolled with the organization under this part is
entitled to receive a health service described in
section 1851C(a) and the amount (if any) that the
individual is required to pay for that service, which
includes the following elements:
``(A) Timely review.--The organization shall
provide for review of a coverage issue within
30 days of a request by such individual, and
for reconsideration, where requested, within 60
days after the initial review.
``(B) Expedited review in urgent cases.--The
organization shall have an expedited process
for review and reconsideration of a coverage
issue in cases in which delayed treatment may
place the health of such individual in
jeopardy, risk serious impairment of bodily
functions, or limit medically appropriate
treatment options.
``(2) Review by external contractor.--An individual
dissatisfied with a determination under paragraph (1)
concerning such individual's coverage under a contract
under this part is entitled to a hearing before an
independent reviewer designated by the Secretary.
``(3) Appeal to secretary.--An individual
dissatisfied with a determination under paragraph (2)
concerning such individual's coverage under a contract
under this part is entitled, if the amount in
controversy is $100 or more, to a hearing before the
Secretary to the same extent as is provided in section
205(b), and in any such hearing the Secretary shall
make the eligible organization a party. If the amount
in controversy is $1,000 or more, the individual or
eligible organization shall, upon notifying the other
party, be entitled to judicial review of the
Secretary's final decision as provided in section
205(g), and both the individual and the eligible
organization shall be entitled to be parties to that
judicial review. In applying sections 205(b) and 205(g)
as provided in this subparagraph, and in applying
section 205(l) thereto, any reference therein to the
Commissioner of Social Security or the Social Security
Administration shall be considered a reference to the
Secretary or the Department of Health and Human
Services, respectively.
``(e) Quality Assurance.--
``(1) Internal quality assurance (iqa) program.--
``(A) In general.--Subject to subparagraph
(B), an eligible organization must have
arrangements, established in accordance with
regulations of the Secretary, for an ongoing
quality assurance program for health care
services provided to individuals enrolled with
the organization under this part that--
``(i) focuses on health outcomes; and
``(ii) provides for review by
physicians and other health care
professionals of the process followed
in the provision of such health care
services.
``(B) Acceptance of accreditation in
satisfaction of iqa standards.--If (or to the
extent that) an eligible organization has been
accredited by an accrediting body whose
standards with respect to one or more of the
elements of an internal quality assurance
program are at least as stringent as such
standards pursuant to subparagraph (A), the
organization shall be deemed to meet the
requirements of such subparagraph (A) with
respect to such program elements.
``(2) External quality review.--
``(A) Requirements.--Each contract with an
eligible organization under this part shall
provide that the organization will maintain an
agreement with--
``(i) a utilization and quality
control peer review organization (which
has a contract with the Secretary under
part B of title XI for the area in
which the eligible organization is
located);
``(ii) an entity selected by the
Secretary under section 1154(a)(4)(C);
or
``(iii) an independent quality review
and improvement organization selected
by the organization and approved by the
Secretary,
under which the review organization will
perform functions under section 1154(a)(4)(B)
and section 1154(a)(14) (other than those
performed under contracts described in section
1866(a)(1)(F)) with respect to services,
furnished by the eligible organization, for
which payment may be made under this title.
``(B) Quality review as covered service.--For
purposes of payment under this title, the cost
of such agreement to the eligible organization
shall be considered a cost incurred by a
provider of services in providing covered
services under this title and shall be paid
directly by the Secretary to the review
organization on behalf of such eligible
organization in accordance with a schedule
established by the Secretary.
``(C) Payment from trust funds.--Such
payments--
``(i) shall be transferred in
appropriate proportions from the
Federal Hospital Insurance Trust Fund
and from the Supplemental Medical
Insurance Trust Fund, without regard to
amounts appropriated in advance in
appropriation Acts, in the same manner
as transfers are made for payment for
services provided directly to
beneficiaries, and
``(ii) shall not be less in the
aggregate for such organizations for a
fiscal year that the amounts the
Secretary determines to be sufficient
to cover the costs of such
organizations' conducting activities
described in subparagraph (A) with
respect to such eligible organizations
under part B of title XI.
``(f) Beneficiary Advance Directives Concerning Medical
Treatment.--A contract under this part shall provide that an
eligible organization shall meet the requirements of section
1866(f) (relating to maintaining written policies and
procedures respecting advance directives).
``(g) Private Enrollment Requirements.--
``(1) 50 percent requirement.--Subject to section
11205 of the Balanced Budget Act of 1995 for Economic
Growth and Fairness, each eligible organization with
which the Secretary enters into a contract under this
part shall have, for the duration of such contract, an
enrolled membership (without consideration of members
enrolled in the program under title XIX) at least one-
half of which consists of individuals who are not
entitled to benefits under this title.
``(2) Exceptions.--The Secretary may modify or waive
the requirement imposed by paragraph (1) only in the
following circumstances:
``(A) Area with large medicare population.--
If more than 50 percent of the population of
the area served by the organization consists of
individuals who are entitled to benefits under
this title.
``(B) Initial period for governmental
contractor.--In the case of an eligible
organization that is owned and operated by a
governmental entity, only with respect to a
period of three years beginning on the date the
organization first enters into a contract under
this part, and only if the organization has
taken and is making reasonable efforts to
enroll individuals who are not entitled to
benefits under this title,
``(C) Underserved rural area.--If the
organization serves an underserved rural area.
``(D) Contractor with good past record.--If
the organization has had contracts under this
part for a total of at least three years, has
complied with all applicable requirements
during that period, maintains a level of
enrollment of individuals not entitled to
benefits under this title determined by the
Secretary, and complies with any additional
monitoring requirements established by the
Secretary.
``(E) Contractor with good record in another
geographic area.--If--
``(i) the Secretary has not
previously entered into a contract with
the organization under this part in the
same geographic area (or has entered
into contracts for a total of three
years or less),
``(ii) the organization (or a parent
company that controls the organization)
has entered into (or subsidiaries of
the organization or parent company have
entered into) contracts under this part
for at least three different geographic
areas--
``(I) for which no waiver has
been granted under this
paragraph and during the course
of which there has been
compliance with all applicable
requirements; or
``(II) for which a waiver has
been granted under subparagraph
(D);
``(iii) the organization (or parent
company) demonstrates to the Secretary
a long-term business and financial
commitment to the geographic area
served by the organization, and the
Secretary determines that a waiver is
necessary to promote competition in
that area; and
``(iv) the organization complies with
all applicable requirements and any
additional monitoring requirements
established by the Secretary.
``(3) Substitution of quality measurement system.--
For conditions under which the requirements of this
subsection will be replaced by requirements of a
quality measurement system, see section 11205 of the
Balanced Budget Act of 1995 for Economic Growth and
Fairness.
``(h) Access to Specialty Care and Case Management.--Each
eligible organization shall ensure that enrollees with chronic
illnesses or disabilities, and other enrollees as appropriate,
shall have access to medically appropriate specialty care and
medically appropriate case management.
``(i) Restrictions on Physician Incentive Plans.--
``(1) Criteria.--Each contract with an eligible
organization under this part shall provide that the
organization may not operate any physician incentive
plan (as defined in paragraph (2)) unless the following
requirements are met:
``(A) No inducement to limit care.--No
specific payment is made directly or indirectly
under the plan to a physician or physician
group as an inducement to reduce or limit
medically necessary services provided with
respect to a specific individual enrolled with
the organization.
``(B) Requirements where physician at
financial risk.--If the plan places a physician
or physician group at substantial financial
risk (as determined by the Secretary) for
services not provided by the physician or
physician group, the organization--
``(i) provides stop-loss protection
for the physician or group that is
adequate and appropriate, based on
standards developed by the Secretary
that take into account the number of
physicians placed at such substantial
financial risk in the group or under
the plan and the number of individuals
enrolled with the organization who
receive services from the physician or
the physician group, and
``(ii) conducts periodic surveys of
both individuals enrolled and
individuals previously enrolled with
the organization to determine the
degree of access of such individuals to
services provided by the organization
and satisfaction with the quality of
such services.
``(C) Disclosure to secretary.--The
organization provides the Secretary with
descriptive information regarding the plan,
sufficient to permit the Secretary to determine
whether the plan is in compliance with the
requirements of this paragraph.
``(2) Definition of `physician incentive plan'.--In
this subsection, the term `physician incentive plan'
means any compensation arrangement between an eligible
organization and a physician or physician group that
may directly or indirectly have the effect of reducing
or limiting services provided with respect to
individuals enrolled with the organization.''.
Medicare's Capitation Payment Provisions
These provisions would replace ``Section 1851F'' (e)(2) of
the Administration's bill.
In general, the Medicare capitation rate would be the
greater of--
(1) a blended rate of the area-specific rate and a
national, input-price adjusted rate, further adjusted
by a budget neutrality adjustment; or
(2) a minimum payment amount; or
(3) the previous year's rate increased by 2 percent.
The payment area is the county.
The blended rate in 1996 and 1997 would be 90 percent area
specific rate and 10 percent the input price adjusted national
rate; in 1998, it would be 85 percent area specific and 15
percent national; in 1999, it would be 80 percent area specific
and 20 percent national; in 2000, it would be 75 percent area
specific and 25 percent national; and in 2001 and subsequent
years, it would be 70 percent area specific and 30 percent
national.
The area-specific rate would be the area specific rate for
the previous year indexed by the national average per capita
growth rate. However, IME, GME and DSH would be removed from
the area-specific rate in 1997.
National average per capita growth rates would be the
Secretary's estimate (determined annually) of the projected per
capita rate of growth in private health insurance expenditures
adjusted to reflect differences between the average benefit
package under private insurance and the Medicare benefit
package and differences in utilization and intensity of
services between the general insured population and Medicare
beneficiaries. Unless the Secretary determines otherwise, the
national average per capita growth percentage would be 7
percent.
The input-price-adjusted annual national capitation rate
for a payment area for a particular year would equal the sum,
for all types of Medicare services, of the product of (1) the
national standardized annual capitation rate for that year, (2)
the proportion of the national standardized annual capitation
rate for that year which is attributable to the type of
service, (3) an input price index that reflects for that year
and the service the relative input price of the service
compared to the national average input price of the service.
The national standardized annual capitation rate for a
particular year would equal the sum (for all payment areas) of
the product of the (1) annual area specific capitation rate for
that year and (2) the average number of beneficiaries residing
in the payment area in that year divided by the total average
number of beneficiaries residing in all payment areas for that
year.
To determine the input price index for 1996, Medicare
services would be divided into 2 types of services--Part A and
Part B. The proportion of the rate attributable to Part A
services would equal the 1995 AAPCC for Part A divided by the
1995 AAPCC for Part A and Part B. The proportion of the rate
attributable to Part B services would be 100 percent minus the
proportion of the rate attributable to Part A services.
In 1996 only, for Part A services, 70 percent of the
payments would be adjusted by the hospital wage index. For Part
B services, 66 percent of the payments would be adjusted by the
GPCI. Of the remaining 34 percent of Part B services, 70
percent would be adjusted by the hospital wage index.
The input price index values would be computed based on the
beneficiary population who are 65 years of age or older who are
not determined to have ESRD.
In 1997, the Secretary could continue to apply the same or
similar methodology.
The minimum payment amount would equal $310 in 1996 and
$325 in 1997. In subsequent years, the minimum amount would be
indexed by the national average per capita growth rate listed
above.
To ensure budget neutrality, each year blended area-
specific capitation payments would be adjusted so that the
total payments would not exceed what total payments would have
been if all payments were based on 100 percent area specific
capitation rate.
``SEC. 1851F. PAYMENTS TO MEDICAREPLUS ORGANIZATIONS.
(a) Payments to Organizations.--
``(1) Monthly payment.--
``(A) In general.--Under a contract under
paragraph (1) the Secretary shall make monthly
payments under this section in advance to each
eligible organization, with respect to coverage
of an individual under this part in a payment
area for a month, in an amount equal to \1/12\
of the annual capitation rate (as calculated
under subsection (c)) with respect to that
individual for that area, adjusted for such
risk factors as age, disability status, gender,
institutional status, and such other factors as
the Secretary determines to be appropriate, so
as to ensure actuarial equivalence. The
Secretary may add to, modify, or substitute for
such factors, if such changes will improve the
determination of actuarial equivalence.
``(B) Special rule for end-stage renal
disease.--The Secretary shall establish a
separate rate of payment to an eligible
organization with respect to any individual
determined to have end-stage renal disease and
enrolled in a plan of the organization. Such
rate of payment shall be actuarially equivalent
to rates paid to other enrollees in the payment
area (or such other area as specified by the
Secretary).
``(2) Adjustment to reflect number of enrollees.--
``(A) In general.--The amount of payment
under this subsection may be retroactively
adjusted to take into account any differences
between the actual number of individuals
enrolled with an organization under this part
and the number of such individuals estimated to
be so enrolled in determining the amount of the
advance payment.
``(B) Special rule for certain enrollees.--
``(i) In general.--Subject to clause
(ii), the Secretary may make
retroactive adjustments under
subparagraph (A) to take into account
individuals enrolled during the period
beginning on the date on which the
individual enrolls with an eligible
organization under a plan operated,
sponsored, or contributed to by the
individual's employer or former
employer (or the employer or former
employer of the individual's spouse)
and ending on the date on which the
individual is enrolled in the
organization under this part, except
that for purposes of making such
retroactive adjustments under this
subparagraph, such period may not
exceed 90 days.
``(ii) Exception.--No adjustment may
be made under clause (i) with respect
to any individual who does not certify
that the organization provided the
individual with the disclosure
statement described in section
1851(E)(a) at the time the individual
enrolled with the organization.
``(b) Annual Announcement of Payment Rates.--
``(1) Annual announcement.--The Secretary shall
annually determine, and shall announce (in a manner
intended to provide notice to interested parties) not
later than August 1 before the calendar year
concerned--
``(A) the annual capitation rate for each
payment area for the year, and
``(B) the risk and other factors to be used
in adjusting such rates under subsection
(a)(1)(A) for payments for months in that year.
``(2) Advance notice of methodological changes.--At
least 45 days before making the announcement under
paragraph (2) for a year, the Secretary shall provide
for notice to eligible organizations of proposed
changes to be made in the methodology from the
methodology and assumptions used in the previous
announcement and shall provide such organizations an
opportunity to comment on such proposed changes.
``(3) Explanation of assumptions.--In each
announcement made under paragraph (1) for a year, the
Secretary shall include an explanation of the
assumptions and changes in methodology used in the
announcement in sufficient detail so that eligible
organizations can compute monthly adjusted capitation
rates for individuals in each payment area which is in
whole or in part within the service area of such an
organization.
``(c) Calculation of Annual Capitation Rates.--
``(1) In general.--For purposes of this part, the
annual capitation rate for a payment area for a
contract year consisting of a calendar year, is equal
to the greatest of the following:
``(A) Blended capitation rate.--The sum of--
``(i) area-specific percentage for
the year (as specified under paragraph
(2) for the year) of the annual area-
specific MedicarePlus capitation rate
for the year for the MedicarePlus
payment area, as determined under
paragraph (3), and
``(ii) national percentage (as
specified under paragraph (2) for the
year) of the input-price-adjusted
annual national MedicarePlus
capitation, rate for the year, as
determined under paragraph (4),
multiplied by a budget neutrality adjustment
factor determined under paragraph (5).
``(B) Minimum amount.--
``(i) For 1996, $310.
``(ii) For 1997, $325.
``(iii) For a succeeding year, is the
minimum amount specified in this
subparagraph for the preceding year
increased by national per capita growth
percentage, specified under paragraph
(6) for that succeeding year.
``(C) Minimum increase of 3 percent over
previous year's rate.--
``(i) For 1996, 102 percent of the
annual per capita rate of payment for
1995 determined under section
1876(a)(1)(C) for the payment area.
``(ii) For a subsequent year, 102
percent of the annual capitation rate
under this subsection for the area for
the previous year.
``(2) Area-specific and national percentages.--For
purposes of paragraph (1)(A)--
``(A) for 1996 and 1997, the `area-specific
percentage' is 90 percent and the `national
percentage' is 10 percent,
``(B) for 1998, the `area-specific
percentage' is 85 percent and the `national
percentage' is 15 percent,
``(C) for 1999, the `area-specific
percentage' is 80 percent and the `national
percentage' is 20 percent,
``(D) for 2000, the `area-specific
percentage' is 75 percent and the `national
percentage' is 25 percent, and
``(E) for a year after 2000, the `area-
specific percentage' is 70 percent and the
`national percentage' is 30 percent.
``(3) Annual area-specific medicare choice capitation
rate.--
``(A) In general.--For purposes of paragraph
(1)(A), subject to subparagraph (B), the annual
area-specific Medicare Choice capitation rate
for a Medicare Choice payment area--
``(i) for 1996 is the annual per
capita rate of payment for 1995
determined under section 1876(a)(1)(C)
for the payment area, increased by the
national average per capita growth
percentage for 1996 (as defined in
paragraph (6)); or
``(ii) for a subsequent year is the
annual area-specific capitation rate
for the previous year determined under
this paragraph for the payment area,
increased by the national average per
capita growth percentage for such
subsequent year.
``(B) Removal of medical education and
disproportionate share hospital payments from
calculation of adjusted average per capita
cost.--In determining the annual area-specific
Medicare Choice capitation rate for 1997 under
subparagraph (A)(i), the average annual per
capita rate of payment for 1996 determined
under (A)(i) shall be determined as though the
Secretary had excluded from such rate any
amounts which the Secretary estimated would
have been payable under this title during the
year for--
``(i) payment adjustments under
section 1886(d)(5)(F) for hospitals
serving a disproportionate share of
low-income patients; and
``(ii) the indirect costs of medical
education under section 1886(d)(5)(B)
or for direct graduate medical
education costs under section 1886(h).
``(4) Input-price-adjusted annual national capitation
rate.--
``(A) In general.--For purposes of paragraph
(1)(A), the input-price-adjusted annual
national capitation rate for a payment area for
a year is equal to the sum, for all the types
of medicare services (as classified by the
Secretary), of the plan (for each such type)
of--
``(i) the national standardized
annual capitation rate (determined
under subparagraph (B)) for the year,
``(ii) the proportion of such rate
for the year which is attributable to
such type of services, and
``(iii) an index that reflects (for
that year and that type of services)
the relative input price of such
services in the area compared to the
national average input price of such
services.
In applying clause (iii), the Secretary shall,
subject to subparagraph (C), apply those
indices under this title that are used in
applying (or updating) national payment rates
for specific areas and localities.
``(B) National standardized annual capitation
rate.--In subparagraph (A)(i), the `national
standardized annual capitation rate' for a year
is equal to--
``(i) the sum (for all payment areas)
of the product of (I) the annual area-
specific capitation rate for that year
for the area under paragraph (3), and
(II) the average number of medicare
beneficiaries residing in that area in
the year; divided by
``(ii) the total average number of
medicare beneficiaries residing in all
the payment areas for that year.
``(C) Special rules for 1996.--In applying
this paragraph for 1996--
``(i) medicare services shall be
divided into 2 types of services: part
A services and part B services;
``(ii) the proportions described in
subparagraph (A)(ii) for such types of
services shall be--
``(I) for part A services,
the ratio (expressed as a
percentage) of the average
annual per capita rate of
payment for the area for part A
for 1995 to the total average
annual per capita rate of
payment for the area for parts
A and B for 1995, and
``(II) for part B services,
100 percent minus the ratio
described in subclause (I);
``(iii) for the part A services, 70
percent of payments attributable to
such services shall be adjusted by the
index used under section 1886(d)(3)(E)
to adjust payment rates for relative
hospital wage levels for hospitals
located in the payment area involved;
``(iv) for part B services--
``(I) 66 percent of payments
attributable to such services
shall be adjusted by the index
of the geographic area factors
under section 1848(e) used to
adjust payment rates for
physicians' services furnished
in the payment area, and
``(II) of the remaining 34
percent of the amount of such
payments, 70 percent shall be
adjusted by the index described
in clause (iii);
``(v) the index values shall be
computed based only on the beneficiary
population who are 65 years of age or
older who are not determined to have
end stage renal disease.
The Secretary may continue to apply the rules
described in this subparagraph (or similar
rules) for 1997.
``(5) Budget neutrality adjustment factor.--For each
year, the Secretary shall compute a budget neutrality
adjustment factor so that the aggregate of the payments
under this part shall not exceed the aggregate payments
that would have been made under this part if the area-
specific percentage for the year had been 100 percent
and the national percentage had been 0 percent.
``(6) National average per capita growth percentage
defined.--In this part, the ``national average per
capita growth percentage shall be the percentage
determined by the Secretary on an annual basis (not
later than August 1st before the calendar year
concerned) to reflect the Secretary's estimate of the
projected per capita rate of growth in private health
insurance expenditures adjusted to reflect differences
between the average benefit package under private
insurance and the Medicare benefit package and
differences in utilization and intensity of services
between the general insured population and Medicare
beneficiaries. In determining this percentage, the
Secretary shall consider the traditional fee-for-
service growth rates to ensure there is not a wide
disparity between fee for service growth rates and the
national average per capita growth rate. Unless the
Secretary otherwise determines, the national average
per capita growth percentage shall be 7 percent.
``(d) Payment Area Defined.--
``(1) In general.--In this part, except as provided
in paragraph (3), the term `payment area' means a
county, or equivalent area specified by the Secretary.
``(2) Rule for esrd beneficiaries.--In the case of
individuals who are determined to have end stage renal
disease, the payment area shall be each State.
``SEC. 1851G. SANCTIONS.
``(a) Violations Subject to Civil Money Penalties.--In
addition to any other remedies authorized by law, the Secretary
may impose a civil money penalty in accordance with subsection
(c) on an eligible organization with a contract under this part
that has committed any of the following violations:
``(1) Failure to provide medically necessary care.--
The organization has failed substantially to provide
medically necessary items and services that are
required (under law or under the contract) to be
provided to an individual covered under the contract,
if the failure has adversely affected (or has
substantial likelihood of adversely affecting) the
individual.
``(2) Excessive premiums.--The organization has
imposed premiums on individuals enrolled under this
part in excess of the premiums permitted.
``(3) Discontinuation of coverage.--The organization
has expelled or refused to re-enroll an individual in
violation of the provisions of this part.
``(4) Discouraging enrollment.--The organization has
engaged in any practice that would reasonably be
expected to have the effect of denying or discouraging
enrollment (except as permitted by this part) by
eligible individuals with the organization whose
medical condition or history indicates a need for
substantial future medical services.
``(5) False information.--The organization has
misrepresented or falsified information furnished--
``(A) to the Secretary under this part, or
``(B) to an individual or to any other entity
under this part.
``(6) Failure to cooperate with external quality
review.--The organization fails to cooperate in the
performance of the review required under section
1851E(e)(2).
``(7) Physician incentive plan violations.--The
organization fails to comply with the requirements of
section 1851E(i).
``(8) Relationship with excluded individual or
entity.--The organization.--
``(A) employs or contracts with any
individual or entity that is excluded from
participation under this title under section
1128 or 1128A for the provision of health care,
utilization review, medical social work, or
administrative services; or
``(B) employs or contracts with any entity
for the provision (directly or indirectly)
through such an excluded individual or entity
of such services.
``(b) Violations Subject to Intermediate Sanctions.--In
addition to any other remedies authorized by law, the Secretary
may impose an intermediate sanction in accordance with
subsection (d) on an eligible organization with a contract
under this part that has committed any of the following
violations:
``(1) Violation subject to civil money penalty.--Any
violation specified in subsection (a).
``(2) Grounds for termination of contract.--Any
violation that would be grounds for termination of the
contract with the organization pursuant to section
1851F(b)(2).
``(3) Failure to make prompt payment.--Failure to
make prompt payment as required by section 1851F(d).
``(4) Delayed coverage determinations.--Failure to
meet timeliness standards for coverage determinations
under section 1851E(d)(1).
``(5) Insufficient private enrollment.--Failure to
meet the minimum requirements of section 1851E(g).
``(c) Civil Money Penalties.--
``(1) Amount of penalty.--The Secretary may impose,
on an eligible organization determined to have
committed a violation specified in subsection (a),
civil money penalties not to exceed the sum of the
following amounts, as applicable:
``(A) for each such determination, not more
than--
``(i) $100,000 in the case of a
determination under subsection (a)(4)
or (a)(5)(i); or
``(ii) $25,000, in the case of any
other such determination;
``(B) with respect to a determination under
subsection (a)(2), double the excess amount
charged (and the excess amount charged shall be
deducted from the penalty and returned to the
individual concerned); and
``(C) with respect to a determination under
subsection (a)(4), $15,000 for each individual
not enrolled as a result of the practice
involved.
``(2) Administrative procedure.--The provisions of
section 1128A (other than subsections (a) and (b) shall
apply to a civil money penalty under this section in
the same manner as they apply to a civil money penalty
or proceeding under section 1128A(a).
``(d) Intermediate Sanctions.--The Secretary may impose, on
an eligible organization determined to have committed a
violation specified in subsection (a) or (b), either or both of
the following sanctions.
``(1) Suspension of enrollment.--Suspension of
enrollment of individuals with the organization under
this part after the date the Secretary notifies the
organization of a determination under subsection (a) or
(b) and until the Secretary is satisfied that the basis
for such determination has been corrected and is not
likely to recur.
``(2) Suspension of payment.--Suspension of payment
to the organization under this part for individuals
enrolled after the date the Secretary notifies the
organization of a determination under subsection (a) or
(b) and until the Secretary is satisfied that the basis
for such determination has been corrected and is not
likely to recur.
``SEC. 1851H. DEFINITIONS.
``(a) Adjusted Community Rate.--
``(1) In general.--For purposes of this part, the
term `adjusted community rate' for a service or
services means, at the election of an eligible
organization, either--
``(A) the rate of payment for that service or
services which the Secretary annually
determines would apply to a member enrolled
under this part with an eligible organization
if the rate of payment were determined under a
community rating system' (as defined in section
1302(8) of the Public Health Service Act, other
than subparagraph (C)), or
``(B) such portion of the weighted aggregate
premium, which the Secretary annually estimates
would apply to a member enrolled under this
part with the eligible organization, as the
Secretary annually estimates is attributable to
that service or services, adjusted in
accordance with paragraph (2).
``(2) Adjustment of differences in utilization.--The
rate determined in accordance with subparagraphs (A)
and (B) of paragraph (1) shall be adjusted for--
``(A) the differences between the utilization
characteristics of the members enrolled with
the eligible organization under this part and
utilization characteristics of the other
members of the organization; or
``(B) (if the Secretary finds that adequate
data are not available to calculate the
adjustment pursuant to subparagraph (A)) the
differences between--
``(i) the utilization characteristics
of members in other eligible
organizations, or individuals in the
area, in the State, or in the United
States, eligible to enroll under this
part with an eligible organization, and
``(ii) the utilization
characteristics of the rest of the
population in the area, in the State,
or in the United States, respectively.
``(b) Adjusted Average Per Capita Cost (AAPCC).--For
purposes of this part, the term `AAPCC' (adjusted average per
capita cost) means the average per capita amount that the
Secretary estimates in advance (on the basis of actual
experience, or retrospective actuarial equivalent based upon an
adequate sample and other information and data, in a geographic
area served by an eligible organization or in a similar area,
with appropriate adjustments to assure actuarial equivalence)
would be payable in any contract year for services covered
under parts A and B, or part B only, and types of expenses
otherwise reimbursable under parts A and B, or part B only
(including administrative costs incurred by organizations
described in sections 1816 and 1842), if the services were to
be furnished by other than an eligible organization or, in the
case of services covered only under section 1861(s)(2)(H), if
the services were to be furnished by a physician or as an
incident to a physician's service.''.
(b) Repeal of Superseded Provision.--Section 1876 (42
U.S.C. 1395mm) is repealed, except to the extent provided in
subsection (e).
(c) Conforming Amendments.--
(1) Section 1154(a)(4)(B) (42 U.S.C. 1320c-
3(a)(4)(B)) is amended--
(A) in the first sentence, by striking
``risk-sharing contract under section 1876''
and inserting ``contract under part C of title
XVIII'', and
(B) in the second sentence, by striking ``a
health maintenance organization or competitive
medical plan under section 1876'' and inserting
``an eligible organization under part C of
title XVIII''.
(2) The second sentence of section 1154(a)(4)(C) (42
U.S.C. 1320c-3(A)(4)(C)) is amended by striking
``section 1876'' and inserting ``part C of title
XVIII''.
(3) Section 1866(a)(1)(O) (42 U.S.C. 1395cc(a)(1)(O))
is amended by striking ``risk-sharing contract under
section 1876'' and inserting ``contract under part C''.
(4) The matter in the first sentence of section
1866(f)(1) (42 U.S.C. 1395cc(f)(1)) preceding
subparagraph (A) is amended by striking ``1876(c)(8)''
and inserting ``1851E(f)''.
(5) Section 1866(f)(2)(E) (42 U.S.C. 1395cc(f)(2)(E))
is amended by striking ``1876(b)'' and inserting
``1851A(a)''.
(6) Section 1882(f)(1) is amended--
(A) by striking ``1876(b) and inserting
``1851A''; and
(B) by striking ``section 1876'' and
inserting ``part C''.
(d) Effective Date.--Except to the extent otherwise
provided, the amendments made by the preceding subsections
apply to items and services furnished after 1996.
(e) Transition Provisions for Cost Contracts.--
(1) Repeal of authority for cost contracts delayed to
2001.--The amendments made by the preceding subsections
(other than the amendments specified in paragraph (2))
do not apply to items and services furnished before
2001 under a contract under section 1876(h) of the
Social Security Act (42 U.S.C. 1395mm(h)).
(2) Provisions whose effect is not delayed.--The
effective dates of the following provisions of part C
of the Social Security Act (as enacted by subsection
(a)(2) of this section) shall not be delayed by reason
of paragraph (1):
(A) Definition of qualified hmo.--Section
1851A(b).
(B) Enrollment and disenrollment.--Section
1851B.
(C) Beneficiary protections.--Subsections (a)
(explanation of patients' rights and
restrictions), (c) (grievance mechanism), (d)
(coverage determinations and appeals), and (g)
(private enrollment requirements) of section
1851E.
(3) Option restricted to grandfathered
organizations.--With respect to services provided after
1995 but before 2001, the Secretary may enter into
contracts under subsection (h) of section 1876 of the
Social Security Act (42 U.S.C. 1395mm) only with
entities with which the Secretary has entered into
contracts under that subsection for all or part of
1995, or to which payments have been made during 1995
under section 1833(a)(1)(A) of that Act (42 U.S.C.
13951(a)(1)(A)).
(f) Regulations.--
(1) Continuity of current regulations.--Regulations
in effect (or available in proposed form) on December
31, 1996, that apply to section 1876 of the Social
Security Act (42 U.S.C. 1395mm) shall apply to part C
of title XVIII of that Act (as enacted by subsection
(a)(2) of this section), except to the extent that the
regulations are inconsistent with the provisions of
that part.
(2) Interim final regulations.--The Secretary may
issue regulations before 1998 for part C of title XVIII
of the Social Security Act (as enacted by subsection
(a)(2) of this section) on an interim final basis.
(g) Consideration of Experience Under Section 1876 in
Satisfaction of Requirements of Part C.--Any requirement in
part C of title XVIII of the Social Security Act (as enacted by
subsection (a)(2) of this section) that (in a particular
context) relates to matters that occurred before 1997 shall be
satisfied if the corresponding requirement was satisfied under
section 1876 (42 U.S.C. 1395mm) of that Act.
(h) Enrollment Transition Rule.--An individual who is
enrolled on December 31, 1996, with an eligible organization
under section 1876 of the Social Security Act (42 U.S.C.
1395mm) shall be considered to be enrolled with that
organization on January 1, 1997, under part C of title XVIII of
that Act (as added by subsection (a)(2) of this section) if
that organization has a contract under that part for providing
services on January 1, 1997 (unless the individual has
disenrolled effective on that date).
(i) Immediate Effective Date for Certain Requirements for
Demonstrations.--Section 1851B(b)(2) of the Social Security Act
(as enacted by subsection (a)(2) of this section) (requiring
contribution to certain costs related to the enrollment process
comparative materials) applies to demonstrations occurring
after the date of enactment of this Act.
SEC. 11203. DEVELOPMENT OF STANDARDS FOR FISCAL SOUNDNESS AND
REQUIREMENTS AGAINST RISK OF INSOLVENCY.
The Secretary of Health and Human Services, in consultation
with the National Association of Insurance Commissioners,
organizations that provide or pay for health care services, and
consumer organizations, shall develop (and publish as an
interim final rule by July 1, 1996) standards for fiscal
soundness and requirements concerning adequate provision
against the risk of insolvency for provider sponsored
organizations that have entered into contracts under part C of
title XVIII of the Social Security Act (as enacted by section
11202(a)(2) of this Act). The Secretary may also publish, as an
interim final rule by that date, any additional requirements
related to such organizations.
SEC. 11204. APPLICABILITY OF MEDICARE RATES TO ENROLLEES WHO USE AN
OUT-OF-PLAN PROVIDER OF SERVICES.
(a) Section 1866(a)(1)(O) (42 U.S.C. 1395cc(a)(1)(O)) is
amended--
(1) by striking ``in the case of hospitals and
skilled nursing facilities,'';
(2) by striking ``inpatient hospital and extended
care services that are covered under this title and''
and inserting ``services that''; and
(3) by striking ``(in the case of hospitals) or
limits (in the case of skilled nursing facilities)''.
(b) The amendment made by subsection (a) applies to
services furnished after 1996.
SEC. 11205. SUBSTITUTION OF QUALITY MEASUREMENT SYSTEM FOR PRIVATE
ENROLLMENT REQUIREMENT.
(a) Promulgation of Regulations.--The Secretary of Health
and Human Services, after consulting with representatives from
managed health care plans (including representatives of
provider service organizations), consumer organizations, and
other major purchasers of managed care services--
(1) shall publish proposed regulations by July 1,
1997, requiring the collection, analysis, and reporting
of data that will permit measurement of outcomes and
other indices of the quality of managed care plans;
(2) shall publish final regulations after completing
review of comments on the proposed regulations
published pursuant to paragraph (1).
(b) Revision of Beneficiary Protection Requirement.--As of
the effective date of final regulations published pursuant to
subsection (a), section 1851E(g) (as enacted by section
11202(a)(2) of this Act) is amended to read as follows:
``(g) Quality Measurement System.--Each eligible
organization with which the Secretary enters into a contract
under this part shall meet the requirements of the quality
measurement system established by the Secretary in
regulations.''.
SEC. 11206. HMO COMPETITIVE PRICING AND RELATED DEMONSTRATIONS.
(a) Amendment Effective on Date of Enactment.--Section
402(b) of the Social Security Amendments of 1967 (42 U.S.C.
1395b-1(b)) is amended by inserting after the first sentence
the following: ``The Secretary may also waive, in the case of
such an experiment or demonstration project, compliance with
the requirements of sections 1876 and 1882 of that Act.
``(2) Report to congress on competitive pricing
demonstration.--Not later then January 1, 2002, the
Secretary shall report to Congress on specific
recommendations for a new payment methodology for
eligible organizations with contracts under Part C to
be based on the results of the competitive pricing
demonstrations.''.
(b) Amendment Effective for 1997-2000.--
(1) The second sentence of section (402)(b) of the
Social Security Amendments of 1967 (42 U.S.C. 1395B-
1(b)) (as added by subsection (a) of this section) is
amended by inserting ``and part C of title XVIII''
after ``1882''.
(2) The amendment made by paragraph (1) applies to
activities occurring after 1996.
(c) Amendment Effective After 2000.--
(1) The second sentence of section 402(b) of the
Social Security Amendments of 1967 (42 U.S.C. 1395b-
1(b)) (as added by subsection (a) and amended by
subsection (b) of this section) is further amended by
striking ``sections 1876 and 1882'' and inserting
``section 1882''.
(2) The amendment made by paragraph (1) applies to
activities occurring after 2000.
SEC. 11207. ELIMINATION OF HEALTH CARE PREPAYMENT PLAN OPTION FOR
ENTITIES ELIGIBLE TO PARTICIPATE UNDER PART C.
(a) Elimination of Option.--
(1) In general.--Section 1833(a)(1)(A) (42 U.S.C.
13951(a)(1)(A)) is amended by inserting after
``prepayment basis'' the following: ``(and either is
sponsored by a union or employer, or does not provide,
or provide benefits for, any inpatient hospital
services)''.
(2) Effective date.--The amendment made by
subparagraph (A) applies to services furnished after
1996.
(b) Medigap Amendment.--Section 1882(g) (42 U.S.C.
1395ss(g)) is amended by striking ``, during the period
beginning on the date specified in subsection (p)(1)(C) and
ending on December 31, 1995,''.
SEC. 11208. MEDIGAP REFORMS.
(a) Uniform Enrollment Periods.--
(1) In general.--Section 1882(s)(2)(A) (42 U.S.C.
1395ss(s)(2)(A)) is amended by striking ``an
application is submitted'' and all that follows and
inserting the following:
``an application is submitted--
``(i) prior to or during the 6-month period beginning
with the first month as of the first day on which the
individual is 65 years of age or older and is enrolled
for benefits under part B;
``(ii) during an annual 30-day period specified by
the Secretary; or
``(iii) during a period specified by the Secretary in
the circumstances described in section 1851B(c)(2)
(with respect to an individual losing coverage through
an organization's termination of contract or
discontinuation of coverage).''.
(2) Effective date.--The amendment made by the
paragraph (1) is effective after 1996.
(b) Standardized Information.--
(1) In general.--
(A)(i) Section 1882 (42 U.S.C. 1395ss) is
amended by adding at the end the following:
``(u) Each entity that offers a medicare supplemental
policy shall pay the Secretary for its pro rata share (a
determined by the Secretary) of the estimated costs to be
incurred by the Secretary in carrying out the requirements of
the first sentence of section 1851B(b)(1) and section 4360 of
the Omnibus Reconciliation Act of 1990. Those payments are
appropriated to defray the costs described in the preceding
sentence, to remain available until expended.''.
(ii) Section 1882(c)(5) (42 U.S.C.
1395ss(c)(5)) is amended by striking ``(t)''
and inserting ``(u)''.
(B) Section 4360(g) of the Omnibus
Reconciliation Act of 1990 (42 U.S.C. 1395b-
4(g)) is amended to read as follows:
``(g) Funding.--For funding provisions, see section
1851B(b)(2), and section 1882(u), of the Social Security
Act.''.
(2) Effective date.--The amendments made by the
preceding paragraphs apply to demonstrations occurring
after the date of enactment of this Act, and to other
activities occurring after 1996.
(c) Community Rating.--
(1) In general.--Section 1882(c) (42 U.S.C.
1395ss(c)) is amended--
(A) by striking ``and'' at the end of
paragraph (4),
(B) by striking the period at the end of
paragraph (5) and adding ``; and'', and
(C) by adding after paragraph (5) the
following: ``(6) provides for the same premium
for each enrollee.''.
(2) Conforming amendment.--Section 1882(b)(1)(B) (42
U.S.C. 1395ss(b)(1)(B)) is amended by striking ``(5)''
and inserting ``(6)''.
(3) Effective date and transitional provisions.--The
amendments made by the preceding paragraphs apply to
policies and plans as of the beginning of 1997 (whether
issued before or after that time), subject to such
transitional rules as the Secretary may develop after
consulting with the National Association of Insurance
Commissioners.
(d) Long-Term Care Insurance Safe Harbor.--
(1) In general.--Section 1882(d)(3)(C) is amended--
(A) by striking ``or (iii)'' and inserting
``(iii)''; and
(B) by inserting before the period the
following: ``, or (iv) the sale or issuance of
a health insurance policy (or rider to an
insurance contract which is not a health
insurance policy) providing benefits only for
long-term care, nursing home care, home health
care, or community-based care, or any
combination thereof, that coordinates against
or excludes items and services available under
this title, if such coordination or exclusion
is disclosed in the policy's outline of
coverage.''.
(2) Effective date and other rules.--
(A) The amendments made by this section shall
take effect as if included in the enactment of
section 4354 of the Omnibus Budget
Reconciliation Act of 1990 (hereafter referred
to as ``OBRA-1990'').
(B) No penalty shall be imposed under section
1882(d)(3)(A)(i) of the Social Security Act for
any set or omission occurring after the
effective date of the amendments made by
section 4354 of OBRA-90 and before the date of
the enactment of this Act relating to the sale
of a health insurance policy described in
section 1882(d)(3)(C)(iv) of the Social
Security Act.
SEC. 11209. STANDARDIZED BENEFITS PACKAGES.
(a) Managed Care.--The Secretary, no later than July 1,
1996, after consulting with the National Association of
Insurance Commissioners, consumer groups, managed care plans,
providers of health care, and insurers, shall develop standard
packages of benefits (in addition to the benefits covered under
title XVIII of the Social Security Act (42 U.S.C. 1395 et
seq.)) that may be offered by eligible organizations under part
C of that title (as added by section 11202(a)(2) of this Act).
(b) Medigap.--
(1)(A) The Secretary shall request the National
Association of Insurance Commissioners, in consultation
with consumer groups, managed care plans, providers of
health care, and insurers, to examine (and recommend by
March 1, 1997, any restructuring needed for) the
standard benefit packages developed under section
1882(p)(2) of the Social Security Act (42 U.S.C.
1395ss(p)(2)) in order to facilitate to the maximum
extent feasible comparison across medicare supplemental
policies and benefits offered by eligible organizations
under section 1876.
(B) The Secretary, no later than May 1, 1997, after
taking into account any recommendations made under
subparagraph (A) by the National Association of
Insurance Commissioners, shall restructure, as needed,
those standard benefit packages.
(2)(A) Section 1882(p) (42 U.S.C. 1395ss(p)) is
amended by adding at the end the following:
``(11) The groups or packages of benefits (including
the core group of basic benefits) under paragraph (2)
shall be modified by any changes made by the Secretary
under section 11209(b)(1)(B) of the Balanced Budget Act
of 1995 for Economic Growth and Fairness.''.
(B) The amendment made by subparagraph (A) applies to
services provided after 1997.
MEDICAID LANGUAGE EXPLANATION
The proposal would include language with establishing a per
capita cap on the average per beneficiary rate of growth in the
Medicaid program.
There would be an ``equity adjustor'' to states with low
per capita expenditures (i.e., their growth rates would be
higher than other states). The national average growth rate,
however, would be tagged to grow by a national index
(compensating for the ``equity adjustor'').
With respect to savings in the disproportionate share
hospital program, we would phase out the current
disproportionate share program and phase in a retargeted
disproportionate share program identical to the Coalition's
bill.
Funding levels would be as follows:
----------------------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001 2002
----------------------------------------------------------------------------------------------------------------
Phase-out........................................ 10.7 8.0 5.3 2.6 0.0 0.0 0.0
Phase-in......................................... 0.0 1.3 2.7 4.0 5.0 5.0 5.0
--------------------------------------------------------------
Total.......................................... 10.7 9.3 8.0 6.6 5.0 5.0 5.0
----------------------------------------------------------------------------------------------------------------
The program would also include a mandatory set-aside of
payments of $290 million for federally qualified health centers
and $125 million for rural health centers in FY 1997 to be
increased annually by the overall rate of Medicaid growth in
the previous year. We estimate this would cost approximately $3
billion over the six year period.
In addition, we would include language from the conference
report for the $3.5 billion for payments to states for costs
incurred for the provision of care to undocumented aliens.
``(b) For Undocumented Immigrants.--
``(1) In general.--Each of the 15 States with the
largest number of illegal immigrants (as estimated by
the Statistics Division of the Immigration and
Naturalization Service as of October, 1992) shall be
entitled, for each of fiscal years 1996 through 2000,
to an amount bearing the same ratio to the amount
specified in paragraph (2) as the illegal immigrant
population in all 15 such States.
``(2) Amounts authorized.--For purposes of paragraph
(1) amounts authorized to be appropriated are:
``(A) $631,000,000 for fiscal year 1996;
``(B) $664,000,000 for fiscal year 1997;
``(C) $699,000,000 for fiscal year 1998;
``(D) $735,000,000 for fiscal year 1999; and
``(E) $771,000,000 for fiscal year 2000.
``(3) Annual report.--Not later than 90 days after
the end of each fiscal year in which a State receives
or uses amounts pursuant to this subsection, the State
shall submit to the Secretary, and make available to
the public, a report on its use of such amounts in such
fiscal year which includes:
``(A) a listing of each of the providers
receiving payment from such amounts and the
amount of such payments; and
``(B) such information as the Secretary may
require to provide an assurance that services
provided with such payments were consistent
with the limitations under section 1903(v).
``(c) Extended Availability of Funds.--Amounts appropriated
pursuant to this section and not required by a State for the
purposes of this section in a fiscal year may be used by the
State for such purposes in any subsequent fiscal year, and
shall remain available until expended.
``(d) State Assurances.--Each State receiving transitional
assistance payments under this section shall provide assurances
satisfactory to the Secretary--
``(1) in the case of payments under subsection (a),
that such payments will be used by the State to make
payments to health care providers for services which
would otherwise be uncompensated; and
``(2) in the case of payments under subsection (b),
that such payments will be used by the State to make
payments for emergency health care services for illegal
immigrants in accordance with section 1903(v).''.
(2) Payments to states.--Section 1903(a) is amended--
(A) by striking the period at the end of
paragraph (7) and inserting ``; plus''; and
(B) by adding after paragraph (7) the
following new paragraph;
``(8) an amount equal to 100 percent
of payments authorized pursuant to
section 1923A''.
(3) Sunset.--Effective October 1, 2000, the
amendments made by this subsection are repealed.
SEC. 11303. MEDICAID ELIGIBILITY QUALITY CONTROL (MEQC) REQUIREMENTS.
Section 1903(u) is amended--
(1) in paragraph (1)(A), to read as follows:
``(A) Notwithstanding subsection (a), the
Secretary shall reduce the aggregate Federal
payment limit applicable to a State for fiscal
year 1997 or any succeeding fiscal year by the
amount, if any, equal to the sum of the
products, for each group defined in section
1931(b), of--
``(i) the number of excess erroneous
enrollments of individuals in each such
group; and
``(ii) the per beneficiary rate
applicable to such group for such
fiscal year pursuant to section
1931(c).'';
(2) in paragraph (1)(C), by striking ``erroneous
excess payments for medical assistance'' and inserting
``excess erroneous enrollments'';
(3) by striking subparagraphs (D) and (E) of
paragraph (1) and inserting the following:
``(D) Calculation factors.--For purposes of
this subsection--
``(i) Erroneous enrollments.--The
term `erroneous enrollments' means,
with respect to a group defined in
section 1931(b), the number of
individuals that a State reports,
pursuant to section 1931(c)(4), as
enrolled in such group who either (I)
should have been so reported as
enrolled in another such group which
has a lower per beneficiary base rate,
or (II) were ineligible for medical
assistance under the State plan.
``(ii) Exclusion from erroneous
enrollments.--The term `erroneous
enrollments' does not include any
enrollment--
``(I) of individuals whose
eligibility was determined
exclusively by the Commissioner
of Social Security under an
agreement pursuant to section
1634, and such other classes of
individuals as the Secretary
may by regulation prescribe
whose eligibility was
determined in part under such
an agreement;
``(II) resulting from the
failure of an individual to
cooperate or give correct
information with respect to
third-party liability as
required under section
1912(a)(1)(C) or 402(a)(26)(C);
or
``(III) during a presumptive
eligibility period (as defined
in section 1920(b)(1)).
``(iii) Excess erroneous
enrollments.--The term `excess
erroneous enrollments' means, with
respect to a group of individuals
defined in section 1931(b), erroneous
enrollments in excess of 3 percent of
total enrollments of individuals in
such group.''; and
(4) in paragraph (2), by striking ``erroneous excess
payments'' and inserting ``excess erroneous
enrollments''.
PART 2--ELIGIBILITY
SEC. 11311. EXTENSION OF COVERAGE TO ADDITIONAL INDIVIDUALS, SUBJECT TO
POVERTY-RELATED OR CASELOAD LIMITS.
(a) Expanded Eligibility.--Section 1902(a)(10) is amended
by adding after subparagraph (F) the following new paragraph:
``(G) at the option of a State, for making
medical assistance available to one of the
following groups of individuals who would
otherwise be ineligible for such assistance:
``(i) individuals whose income does
not exceed a limit established by the
State, not greater than 150 percent of
the Federal poverty line; or * * *
(b) Disregard of Additional Enrollees in Calculation of
Federal Payment Limit.--Section 1931(c)(4)(A), as added by
section 11301 of this Act, is amended by adding at the end the
following new clause:
``(iii) Expanded eligibility
disregard.--The numbers reported by the
State shall not include any individuals
enrolled in the State program under
this title pursuant to section
1902(a)(10)(G).''.
SEC. 11312. ELIMINATION OF AUTHORITY FOR NEW ELIGIBILITY EXPANSION
DEMONSTRATIONS.
Section 1115(a)(1) is amended by inserting ``(except that
waivers of requirements of section 1902 with respect to
eligibility of individuals for medical assistance shall not be
granted (but may be extended or modified) on or after October
1, 1996)'' after ``project''.
SEC. 11313. UPPER INCOME LIMIT ON ``LESS RESTRICTIVE'' ELIGIBILITY
METHODOLOGIES.
Section 1902(r)(2) is amended--
(1) in paragraph (A), by inserting ``(except as
provided in subparagraph (C))'' after ``no more
restrictive''; and
(2) by adding at the end the following new
subparagraph:
``(C) The methodology described in subparagraph (A) shall
not result in an income eligibility limit (based on gross
income) higher than the higher of--
``(i) 150 percent of the Federal poverty line; or
``(ii) the income eligibility limit applicable under
the State plan in effect in fiscal year 1995 (taking
into account any such limit applicable under a waiver
under section 1115).''.
PART 3--MANAGED CARE
SEC. 11321. PRIMARY CARE CASE MANAGEMENT SERVICES AS STATE OPTION
WITHOUT NEED FOR WAIVER.
(a) Primary Care Case Management Services Defined.--Section
1905 is amended by adding at the end of the following new
subsection:
``(t)(1) The term `primary care case management system'
means a State program under which individuals eligible for
medical assistance under the State plan under this title are
enrolled with primary care case managers and are entitled to
receive health care items and services covered under the State
plan and specified in such program only as approved (and
arranged or provided) by such managers.
``(2) The term `primary care case manager' means a provider
that has entered into a primary care case management contract
with the State agency and that is--
``(A) a physician, a physician group practice, or an
entity employing or having other arrangements with
physicians who provide case management services; or
``(B) at State option--
``(i) a nurse practitioner (as described in
section 1905(a)(21);
``(ii) a certified nurse-midwife (as defined
in section 1861(gg)); or
``(iii) a physician assistant (as defined in
section 1861(aa)(5).
``(3) The term `primary care case management contract'
means a contract with a State agency under which a primary care
case manager undertakes to locate, coordinate and monitor
covered primary care, covered primary care and other services,
or covered services specified by the State, to all individuals
enrolled with the primary care case manager, and which provides
for--
``(A) reasonable and adequate hours of operation,
including 24-hour availability of information,
referral, and treatment with respect to medical
emergencies;
``(B) restriction of enrollment to individuals
residing sufficiently near a service delivery site of
the entity to be able to reach such site within a
reasonable time using available and affordable modes of
transportation;
``(C) employment of, or contracts or other
arrangements with, sufficient numbers of physicians and
other appropriate health car professionals to ensure
that services under the contract can be furnished to
enrollees promptly and without compromise to quality of
care;
``(D) a prohibition on discrimination on the basis of
health status or requirements for health services in
enrollment, disenrollment, reenrollment, or
disenrollment of individuals eligible for medical
assistance under this title; and
``(E) a right for enrollees to terminate such
enrollment without cause during the first month of each
enrollment period, each such enrollment period not to
exceed six months in duration, and to terminate their
enrollment at any time for cause.
``(4) The term `primary care' includes all health care
services customarily provided by or under the supervision of,
and all laboratory services customarily provided by or through,
a general practitioner, family medicine physician, internal
medicine physician, obstetrician/gynecologist, or
pediatrician.''.
(b) Inclusion in Definition of Medical Assistance.--Section
1905(a) is amended--
(1) by striking ``and'' at the end of paragraph (24);
(2) by redesignating paragraph (25) as paragraph
(26); and
(3) by inserting after paragraph (24) the following
new paragraph:
``(25) primary care case management services (as
defined in subsection (t)); and''.
(c) State Plan Requirement.--Section 1902(a) is amended--
(1) by striking ``and'' at the end of paragraph (61);
(2) by striking the period at the end of paragraph
(62) and inserting ``; and''; and
(3) by adding after paragraph (62) the following new
paragraph:
``(63) provide that any primary care case management
services furnished under the plan will be furnished in
accordance with the provisions of section 1905(t).''.
(d) Repeal of Waiver Authority.--Section 1915(b) is amended
by striking paragraph (1) and redesignating paragraphs (2),
(3), and (4) as paragraphs (1), (2), and (3), respectively.
(e) Exception to Freedom of Choice.--For State option to
mandate enrollment in primary care case management programs,
see section 11322.
SEC. 11322. STATE OPTIONS TO RESTRICT CHOICE OF PROVIDERS.
(a) Mandatory Enrollment in Managed Care.--Section 1915(a)
is amended by inserting at the end the following new paragraph:
``(3) requires individuals eligible for medical
assistance for items or services under the State plan
to enroll with an entity that provides or arranges for
services for enrollees under a contract pursuant to
section 1903(m), or with a primary care case manager
(as defined in section 1905(t)) (and/or restricts the
number of provider agreements with such entities under
the State plan, consistent with quality of care), if--
``(A)(i) individuals are permitted to choose
between at least 2 such entities, or 2 such
managers, or an entity and a manager, each of
which has sufficient capacity to provide
services to enrollees; or
``(ii) with respect to a rural area--
``(I) individuals who are required to
enroll with a single entity are
afforded the option in appropriate
circumstances to obtain covered
services by an alternative provider;
and
``(II) an individual who is offered
no alternative to a single entity or
manager is given a choice between at
least two providers within such entity
or through such manager;
``(iii)(I) the State does not restrict the
participation of any Indian health program
specified in section 1931(d)(1)(C); and
``(II) in any case in which the State directs
the enrollment of an individual who is an
Indian (as defined in section 4 of the Indian
Health Care Improvement Act of 1976) in
accordance with this subsection, such
individual is enrolled with a participating
entity specified in subclause (I), if any;
``(B) the State restricts such individuals
from changing their enrollment without cause
for periods no longer than six months (and
permits enrollees to change enrollment for
cause at any time); and
``(C) such restrictions do not apply to
providers of family planning services (as
defined in section 1905(a)(4)(C)) and are not
conditions for payment of medicare cost sharing
pursuant to section 1905(p)(3).''.
(b) State Option for Six-Month Lock-In in Risk-Based
Arrangements.--Section 1903(m)(2) is amended--
(1) in paragraph (A)(vi)--
(A) by striking ``(I) as provided under
subparagraph (F),''; and
(B) by striking all that follows ``to
terminate such enrollment'' and inserting ``in
accordance with the provisions of subparagraph
(F);''; and
(2) in subparagraph (F), by striking ``In the case
of--'' and all that follows through ``a State plan''
and inserting ``A State plan''.
SEC. 11323. ELIMINATION OF RESTRICTIONS ON RISK CONTRACTS.
(a) 75 Percent Limit on Medicare and Medicaid Enrollment.--
(1) In general.--Section 1903(m)(2)(A) is amended by
striking clause (ii).
(2) Conforming amendments.--Section 1903(m)(2) is
amended--
(A) by striking subparagraphs (C), (D), and
(E); and
(B) in subparagraph (G), by striking
``clauses (i) and (ii)'' and inserting ``clause
(i)''.
(b) Secretarial Approval of Contracts Over $100,000.--
Section 1903(m)(2)(A) is amended in clause (iii) by striking
all that follow ``actuarially sound basis'' and inserting a
semicolon.
(c) Additional Amendments.--For additional amendments to
section 1903(m)(2)(A), see section 11341(b).
SEC. 11324. 6-MONTH GUARANTEED ELIGIBILITY FOR ALL INDIVIDUALS ENROLLED
IN MANAGED CARE.
Section 1902(e)(2) is amended--
(1) by striking ``who is enrolled'' and all that
follows through ``section 1903(m)(2)(A)'' and inserting
``who is enrolled with a health maintenance
organization (as defined in section 1903(m)), with a
primary care case manager (as defined in section
1905(t),''; and
(2) by inserting before the period ``or by or through
such case manager''.
SEC. 11325. REQUIREMENTS TO ENSURE QUALITY OF AND ACCESS TO CARE UNDER
MANAGED CARE PLANS.
Section 1902(a), as amended by section 11321(c), is
amended--
(1) in paragraph (62), by striking ``; and'' at the
end and inserting a semicolon;
(2) by striking the period at the end of paragraph
(63) and inserting ``; and''; and
(3) by adding after paragraph (63) the following new
paragraph:
``(64) provide, with respect to all agreements
between the State agency and entities described in
section 1903(m), section 1905(t), and other providers
of managed care services--
``(A) that the State agency will develop and
implement a quality improvement strategy,
consistent with standards established by the
Secretary, which includes--
``(i) standards for the provision of
services under such agreements designed
to ensure reasonable access of enrolled
individuals to covered services meeting
applicable standards for quality and
safety;
``(ii) procedures for monitoring
performance of entities under such
agreements, including--
``(I) procedures for
collection from (or reporting
by) providers of patient data;
and
``(II) procedures for
analysis of such data;
``(B) that providers entering into such
agreements under which payment is made on a
prepaid capitated or other risk basis shall be
required--
``(i) to demonstrate a capacity to
deliver covered services to all
enrolled individuals; and
``(ii) to maintain an internal
quality assurance program, meeting such
standards as the Secretary may
establish in regulations, which
includes a grievance process.''.
PART 4--BENEFITS
SEC. 11331. HOME- AND COMMUNITY-BASED SERVICES AS STATE OPTION WITHOUT
NEED FOR WAIVER.
(a) Elimination of Waiver Restriction.--Section 1915(c) is
relocated and redesignated as subsection (u) of section 1905,
and is amended--
(1) in paragraph (1), by striking everything through
``pursuant to a written plan'' and inserting ``The term
`home- and community-based services' means items and
services (other than room and board) which are provided
in accordance with the provisions of this subsection,
and pursuant to a written plan'';
(2) in paragraph (2)--
(A) by striking the matter that precedes
subparagraph (A) and inserting ``A State agency
that elects to provide home- and community-
based services as defined in this subsection
shall ensure that--'';
(B) by adding ``and'' at the end of
subparagraph (B);
(C) by striking the semicolon at the end of
subparagraph (C) and inserting a period; and
(D) by striking subparagraphs (D) and (E);
(3) in paragraph (3), to read as follows:
``(3) A State plan may provide--
``(i) that home- and community-based services
furnished under the plan shall not be subject
to the provisions of section 1902(a)(1)
(relating to statewideness), section
1902(a)(10)(B) (relating to comparability), or
section 1902(a)(10)(C)(i)(III) (relating to
income and resource rules applicable in the
community), and
``(ii) for purposes of post-eligibility
treatment of income, for disregard of a greater
amount for the maintenance needs of the
individual than amounts specified in
regulations with respect to a similarly
situated institutionalized individual.'';
(4) in paragraph (4)--
(A) by striking the matter preceding
subparagraph (A) and inserting ``A State plan
providing for home- and community-based
services may--'';
(B) in subparagraph (A)--
(i) by striking ``benefits under such
waiver'' and inserting ``such
benefits'';
(ii) by striking ``under such
waiver'' and inserting ``for such
benefits''; and
(iii) by striking ``if the waiver did
not apply'' and inserting ``if
institutionalized''; and
(C) by striking the final sentence; and
(5) by striking paragraphs (6) through (10).
(b) Inclusion in Definition of ``Medical Assistance''.--
Section 1905(a)(22) is amended to read ``home- and community-
based services (as defined in subsection (u));''.
(c) State Plan Requirement.--Section 1902(a), as amended by
sections 11321(c) and 11325, is amended--
(1) by striking ``and'' at the end of paragraph (63);
(2) by striking the period at the end of paragraph
(64) and inserting ``; and''; and
(3) by adding after paragraph (64) the following new
paragraph:
``(65) provide that any home- and community-based
services furnished under the plan will be furnished in
accordance with the provisions of section 1905(u).''.
(d) Repeal of Superseded Provisions.--
(1) Sections 1929 and 1930 are repealed.
(2) Section 1905(a) is amended by striking paragraph
(23).
SEC. 11332. ELIMINATION OF REQUIREMENTS TO PAY FOR PRIVATE INSURANCE.
(a) Repeal of State Plan Provision.--
(1) Section 1902(a)(25) is amended--
(A) by striking subparagraph (G); and
(B) by redesignating subparagraphs (H) and
(I) as subparagraphs (G) and (H), respectively.
(b) Repeal of Enrollment Requirements.--Section 1906 is
repealed.
(c) Reinstatement of State Option.--Section 1905(a) is
amended, in the matter preceding clause (i), by inserting
``(including, at State option, through purchase or payment of
enrollee costs of health insurance)'' after ``The term `medical
assistance' means payment''.
SEC. 11333. BENEFITS FOR INDIVIDUALS COVERED DURING TRANSITION TO WORK.
(a) Payment of Group Health Coinsurance at Medicaid
Rates.--
(1) Section 1925(a)(4)(B) is amended--
(A) by striking ``and'' at the end of clause
(i)(II);
(B) by striking the period at the end of
clause (ii); and
(C) by adding after clause (ii) the following
new clause:
``(iii) the State may limit the
amount of any deductible or copayment
for any health care item or service to
the applicable portion of the amount
the State would pay if such item or
service had been furnished by a
provider participating in the program
under the State plan.''.
(2) Section 1925(b)(4)(D) is amended by adding at the
end the following new sentence: ``If the State elects
to pay such deductibles and coinsurance, the State may
limit the amount of such payments as provided in
subsection (a)(4)(C)(iii).''.
(b) Elimination of Premium Limit.--Section 1925 (b)(5)(C)
is repealed.
(c) Provision Concerning Reporting Requirements made
Optional.--
(1) Reporting requirement.--Section 1925(b)(2)(B) is
amended to read as follows:
``(B) Reporting requirements.--Each State may
require, as a condition for additional extended
assistance under this subsection, reports by
the family at such times and containing such
information as the State may specify concerning
gross monthly earnings and costs for child
care.''.
(2) State option to terminate benefits for failure to
report.--Section 1925(b)(3)(A) is amended (a) in clause
(iii), by striking ``(2)(B)(ii)'' each place it appears
and inserting ``(2)(B)''.
PART 5--PROVIDER PARTICIPATION AND PAYMENT RATES
SEC. 11341. METHODS FOR ESTABLISHING PROVIDER PAYMENT RATES.
(a) Plan Amendments.--Section 1902(a)(13) is amended--
(1) by striking all that precedes subparagraph (D)
and inserting the following:
``(13) provide--
``(A) for a public process for determination of rates
of payment under the plan (including any payment
adjustments under section 1923) for nursing facility
services and services of intermediate care facilities
for the mentally retarded under which--
``(i) proposed rates are published, and
providers, beneficiaries and their
representatives, and other concerned State
residents are given a reasonable opportunity
for review and comment thereon; and
``(ii) final rates are published, together
with justifications based on the administrative
record; and'';
(2) by redesignating subsections (D) and (E) as
subsections (B) and (C), respectively;
(3) in subparagraph (B), as redesignated, by striking
everything through ``of 100 percent of costs'' and
inserting the following:
``(B) for payment under the plan--
``(i) for all services described in clause
(B) or (C) of section 1905(a)(2) furnished on
or before September 30, 1998; and
``(ii) for services described in clause (i)
furnished on or after October 1, 1998, by an
entity described in section 1931(d)(1)(C) of
100 percent of costs''; and
(4) by striking subsection (F).
(b) Study and Report to Congress.--The Secretary shall
conduct a study of the effect on access to services, and
quality and safety of services, of the rate-setting methods
used by States pursuant to section 1902(a)(13) of the Social
Security Act, as amended by subsection (a), and shall submit a
report to the Congress on the conclusions from such study,
together with any legislative recommendations, not later than
the date four years after enactment of this Act.
SEC. 11343. ELIMINATION OF OBSTETRICAL AND PEDIATRIC PAYMENT RATE
REQUIREMENTS.
Section 1926 is repealed.
PART 6--STATE PLAN ADMINISTRATION
SEC. 11351. MMIS REQUIREMENTS.
(a) In General.--Section 1903(r) is amended--
(1) by striking all that precedes paragraph (5) and
inserting the following:
``(r) Medicaid Management Information Systems (MMIS).--(1)
In General.--In order to receive payments under subsection (a)
for use of automated data systems in administration of the
State plan under this title, a State must have in operation
mechanized claims processing and information retrieval systems
that meet the requirements of this subsection and that the
Secretary has found to be--
``(A) adequate to provide efficient, economical, and
effective administration of such State plan;
``(B) compatible with the claims processing and
information retrieval systems used in the
administration of title XVIII, and for this purpose--
``(i) having a uniform identification coding
system for providers, other payees, and
beneficiaries under this title or title XVIII;
``(ii) providing liaison between States and
carriers and intermediaries with agreements
under title XVIII to facilitate timely exchange
of appropriate data; and
``(iii) providing for exchange of data
between the States and the Secretary with
respect to persons sanctioned under this title
or title XVIII;
``(C) capable of providing accurate and timely data;
``(D) able to accommodate receipt of provider claims
in standard formats to the extent specified by the
Secretary; and
``(E) able to transmit electronically such data as is
specified by the Secretary.''.
(2) in paragraph (5)--
(A) by striking all that precedes clause (i)
and inserting the following:
``(2) In order to meet the requirements of this paragraph,
mechanized claims processing and information retrieval systems
must meet the following requirements:'';
(B) in clause (iii), by striking ``under
paragraph (6)''; and
(C) by redesignating clauses (i) through
(iii) as paragraphs (A) through (C); and
(3) by striking paragraphs (6), (7), and (8).
(b) Conforming Amendments.--Section 1902(a)(25)(A)(ii) is
amended--
((1) by striking ``, and'' at the end of subclause
(I) and inserting a semicolon;
(2) by relocating the matter in subclause (I)
immediately after ``which plan shall'', after striking
the intervening hyphen and the subclause designation;
and
(3) by striking subclause (II).
SEC. 11352. ELIMINATION OF PERSONNEL REQUIREMENTS.
Section 1902(a)(4) is amended--
(1) in subparagraph (A), to read as follows:
``(A) provide such methods of administration as found
by the Secretary to be necessary for the proper and
efficient operation of the plan;'';
(2) by striking subparagraph (B); and
(3) by redesignating subparagraph (C) as subparagraph
(B).
SEC. 11353. ELIMINATION OF REQUIREMENTS FOR COOPERATIVE AGREEMENTS WITH
HEALTH AGENCIES.
Section 1902(a)(11) is repealed.
SEC. 11355. STATE REVIEW OF MENTALLY ILL OR RETARDED NURSING FACILITY
RESIDENTS UPON CHANGE IN PHYSICAL OR MENTAL
CONDITION.
(a) State Review on Change in Resident's Condition.--
Section 1919(e)(7)(B)(iii) is amended to read as follows:
``(iii) Review required upon change in
resident's condition.--A review and
determination under clause (i) or (ii) must be
conducted promptly after a nursing facility has
notified the State mental health authority or
State mental retardation or developmental
disability authority, as applicable, with
respect to a mentally ill or mentally retarded
resident, that there has been a significant
change in the resident's physical or mental
condition.''.
(b) Conforming Amendments.--
(1) Section 1919(b)(3)(E) is amended by adding at the
end the following: ``In addition, a nursing facility
shall notify the State mental health authority or State
mental retardation or developmental disability
authority, as applicable, promptly after a significant
change in the physical or mental condition of a
resident who is mentally ill or mentally retarded.''.
(2) The heading to section 1919(e)(7)(B) is amended
by striking ``annual''.
(3) The heading to section 1919(e)(7)(D)(i) is
amended by striking ``annual''.
SEC. 11356. NURSE AID TRAINING IN MEDICARE AND MEDICAID NURSING
FACILITIES SUBJECT TO EXTENDED SURVEY AND UNDER
CERTAIN OTHER CONDITIONS.
(a) Medicare.--Section 1819(f)(2)(B)(iii)(I) is amended, in
the matter preceding sub-subclause (a), by striking ``by or in
a skilled nursing facility'' and inserting ``by a skilled
nursing facility (or in such a facility, unless the State
determines that there is no other such program offered within a
reasonable distance, provides notice of the approval to the
State long-term care ombudsman, and assures, through an
oversight effort, that an adequate environment exists for such
a program)''.
(b) Medicaid.--Section 1919(f)(2)(B)(iii)(I) is amended, in
the matter preceding sub-subclause (a), by striking ``by or in
a nursing facility'' and inserting ``by a nursing facility (or
in such a facility, unless the State determines that there is
no other such program offered within a reasonable distance,
provides notice of the approval to the State long-term care
ombudsman, and assures, through an oversight effort, that an
adequate environment exists for such a program)''.
SEC. 11357. COMBINED STATE PLAN SUBMISSION.
(a) In General.--A State may submit to the Secretary of
Health and Human Services a single State plan (with any
amendments) to carry out--
(1) the long-term care grant program established by
subtitle E;
(2) the program of health insurance for the
temporarily unemployed established by subtitle G; and
(3) the medical assistance program under title XIX of
the Social Security Act.
(b) Effect of Combined Submission.--A State plan submitted
pursuant to subsection (a) must meet all requirements of each
of the programs specified in such subsection.
(c) Timetable For Approval.--The Secretary shall, within 90
days after receipt of a State plan submitted pursuant to
subsection (a), either approve or disapprove the plan, or
inform the State that specified additional information is
needed to permit review of the plan.
SEC. 11358. PUBLIC PROCESS FOR DEVELOPING STATE PLAN AMENDMENTS.
Section 1902(a), as amended by sections 11321(c), 11325,
and 11331(c), is amended--
(1) by striking ``and'' at the end of paragraph (64);
(2) by striking the period at the end of paragraph
(65) and inserting ``; and''; and
(3) by adding after paragraph (65) the following new
paragraph:
``(66) a process for development of amendments to the
State plan that affords an opportunity for review and
comment to interested persons and groups, including
beneficiaries, providers, Indian tribes, tribal
organizations, Indian Health Service facilities, and
urban Indian health organizations.''.
PART 7--EFFECTIVE DATE
SEC. 11361. EFFECTIVE DATE.
(a) In General.--Except where otherwise specifically
provided, the provisions of and amendments made by this
subtitle shall be effective with respect to State programs
under title XIX of the Social Security Act on and after October
1, 1996.
(b) Extension For State Law Amendment.--In the case of a
State plan under title XIX of the Social Security Act which the
Secretary of Health and Human Services determines requires
State legislation in order for the plan to meet the additional
requirements imposed by the amendments made by subsection (a),
the State plan shall not be regarded as failing to comply with
the requirements of such title solely on the basis of its
failure to meet these additional requirements before the first
day of the first calendar quarter beginning after the close of
the first regular session of the State legislature that begins
after the date of enactment of this Act. For purposes of the
previous sentence, in the case of a State that has a 2-year
legislative session, each year of such session shall be deemed
to be a separate regular session of the State legislature.
Subtitle D--Fraud and Abuse
SEC. 11401. SHORT TITLE; TABLE OF CONTENTS OF SUBTITLE.
(a) Short Title.--This subtitle may be cited as the
``Federal Health Care Payment Integrity Act of 1995''.
(b) Table of Contents of Subtitle.--The table of contents
of this subtitle is as follows:
TABLE OF CONTENTS
Sec. 11401. Short title; references in subtitle.
Part 1--Amendments to Current Law Enforcement Authorities
Sec. 11402. Extension of current civil money penalties.
Sec. 11403. Exclusion of persons who defraud Medicare.
Sec. 11404. Illegal remuneration with respect to health care benefit
programs
Sec. 11405. Amendments to PRO (quality of care) sanctions provisions.
Sec. 11406. Final adverse action data base.
Sec. 11407. Expansion of authority of medicaid fraud control units.
Sec. 11408. Recovery of overpayments from bankrupt providers.
Sec. 11409. Grants to States to revoke licenses of unqualified
providers.
Sec. 11410. Authorization for interception of wire, oral or electronic
communications.
Part 2--Resources for Anti-Fraud Activities
Sec. 11421. Medicare anti-fraud and abuse program.
Sec. 11422. Medicare beneficiary integrity system.
Sec. 11423. Government-side anti-fraud reinvestment fund.
Part 3--Amendments to Criminal Law
Sec. 11431. Health care fraud.
Sec. 11432. Forfeitures for federal health care offenses.
Sec. 11433. Injunctive relief relating to federal health care offenses.
Sec. 11434. Grand jury disclosure.
Sec. 11435. False statements.
Sec. 11436. Obstruction of criminal investigations, audits or
inspections of federal health care offenses.
Sec. 11437. Theft or embezzlement.
Sec. 11438. Laundering of monetary instruments.
Sec. 11439. Authorized investigative demand procedures.
Part 4--Medicare Improvements
Subpart A--Coordination of Benefits
Sec. 11441. Clarification of time and filing limitations.
Sec. 11442. Clarification of liability of third party administrators.
Sec. 11443. Clarification of payment amounts to Medicare.
Sec. 11444. Conditions for double damages.
Sec. 11445. Repeal of excise tax.
Sec. 11446. Information requirements.
Sec. 11447. Technical changes concerning minimum sizes of group health
plans.
Subpart B--Contractor Reform
Sec. 11451. Increased flexibility in contracting for medicare claims
processing.
Subpart C--Provisions Relating to Part B of Medicare
Sec. 11461. Replacement of reasonable charge methodology by fee
schedules.
Sec. 11462. Application of inherent reasonableness to surgical
dressings.
Sec. 11463. Application of competitive acquisition process to certain
part B items and services.
Sec. 11464. Application of competitive acquisition process to laboratory
services.
Sec. 11465. Changes in payments for clinical laboratory tests.
Subaprt D--Provisions Relating to Parts A and B of Medicare
Sec. 11471. Disclosure of taxpayer identifying numbers and other
information.
Sec. 11472. Use of wage index for area in which home health services are
furnished.
PART 1--AMENDMENTS TO CURRENT LAW ENFORCEMENT AUTHORITIES
SEC. 11402. EXTENSION OF CURRENT CIVIL MONEY PENALTIES.
(a) General Civil Money Penalties.--Section 1128A (42
U.S.C. 1320a-7a) is amended--
(1) in the third sentence of subsection (a), by
striking ``programs under title XVIII'' and inserting
``Federal health care program (as defined in subsection
(m))'';
(2) in subsection (f)--
(A) by redesignating paragraph (3) as
paragraph (4); and
(B) by inserting after paragraph (2) the
following new paragraph:
``(3) With respect to amounts recovered arising out
of a claim under a Federal health care program (as
defined in subsection (m)), the portion of such amounts
as is determined to have been paid by the program shall
be repaid to the program, and the portion of such
amount attributable to the amounts recovered under this
section by reason of the amendments made by the Federal
Health Care Payment Integrity Act of 1995 (as estimated
by the Secretary) shall be deposited into the Health
Care Fraud and Abuse Control Account established under
section 11423 of such Act.'';
(3) in subsection (i)--
(A) in paragraph (2), by striking ``title V,
XVIII, XIX, or XX of this Act'' and inserting
``a Federal health care program (as defined in
subsection (m))'';
(B) in paragraph (4), by striking ``a health
insurance or medical services program under
title XVIII or XIX of this Act'' and inserting
``a Federal health care program (as so
defined)''; and
(C) in paragraph (5), by striking ``title V,
XVIII, XIX, or XX'' and inserting ``a Federal
health care program (as so defined)''; and
(4) by adding at the end the following new
subsection:
``(m)(1) For purposes of this section, with respect to a
Federal health care program not contained in this Act,
references to the Secretary in this section shall be deemed to
be references to the Secretary of Administrator of the
department or agency with jurisdiction over such program and
references to the Inspector General of the Department of Health
and Human Services in this section shall be deemed to be
references to the Inspector General and any other office with
primary enforcement authority of the applicable department or
agency. With respect to investigations of an employee welfare
benefit plan as defined in section 3 of the Employee Retirement
Income Security Act, the agency or department shall be deemed
to be the Department of Labor.
``(2)(A) The Secretary and Administrator of the departments
and agencies referred to in paragraph (1) may include, in any
action pursuant to this section, claims within the Jurisdiction
of other Federal departments or agencies as long as the
following conditions are satisfied:
``(i) The case involves primarily claims submitted to
the Federal health care programs of the department or
agency initiating the action.
``(ii) The Secretary of Administrator and the
Inspector General of the department or agency
initiating the action gives notice and an opportunity
to participate in the investigation to the Secretary or
Administrator and the Inspector General of the
department or agency with primary jurisdiction over the
Federal health care programs to which the claims were
submitted. With respect to actions involving an
employee welfare benefit plan as defined in section 3
of the Employee Retirement Income Security Act, the
department with primary jurisdiction shall be deemed to
be the Department of Labor for purposes of this notice.
``(B) If the conditions specified in subparagraph (A) are
fulfilled, the Inspector General of the department or agency
initiating the action is authorized to exercise all powers
granted under the Inspector General Act of 1978 with respect to
the claims submitted to the other departments or agencies to
the same manner and extent as provided in that Act with respect
to claims submitted to such departments or agencies.''.
(b) Excluded Individual Retaining Ownership or Control
Interest in Participating Entity.--Section 1128A(a) (42 U.S.C.
1320a-7a(a)) is amended--
(1) by striking ``or'' at the end of paragraph
(a)(D);
(2) by striking ``, or'' at the end of paragraph (2)
and inserting a semicolon;
(3) by striking the semicolon at the end of paragraph
(3) and inserting ``; or''; and
(4) by inserting after paragraph (3) the following
new paragraph:
``(4) in the case of a person who is not an
organization, agency, or other entity, is excluded from
participating in a program under title XVIII or a State
health care program in accordance with this subsection
or under section 1128 and who, at the time of a
violation of this subsection, retains a direct or
indirect ownership or control interest of 5 percent or
more, or an ownership or control interest (as defined
in section 1124(a)(3)) in, or who is an officer or
managing employee (as defined in section 1126(b)) of,
an entity that is participating in a program under
title XVIII or a State health care program;''.
(c) Employer Billing for Services Furnished, Directed, or
Prescribed by an Excluded Employee.--Section 1128A(a)(1) (42
U.S.C. 1320a-7a(a)(1)) is amended--
(1) by striking ``or'' at the end of subparagraph
(C);
(2) by striking ``; or'' at the end of subparagraph
(D) and inserting ``, or''; and
(3) by adding at the end the following new
subparagraph:
``(E) is for a medical or other item or
service furnished, directed, or prescribed by
an individual who is an employee or agent of
the person during a period in which such
employee or agent was excluded from the program
under which the claim was made on any of the
grounds for exclusion described in subparagraph
(D);''.
(d) Modifications of Amounts of Penalties and
Assessments.--Section 1128A(a) (42 U.S.C. 1320a-7a(a)), as
amended by subsection (b), is amended in the matter following
paragraph (4)--
(1) by striking ``$2,000'' and inserting $10,000'';
(2) by inserting ``; in cases under paragraph (4),
$10,000 for each day the prohibited relationship
occurs'' after ``false or misleading information was
given''; and
(3) by striking ``twice the amount'' and inserting
``3 times the amount''.
(e) Claims for Item or Service Based on Incorrect Coding.--
Section 1128A(a)(1)(A) (42 U.S.C. 1320a-7a(a)(1)(A)) is amended
by striking ``claimed,'' and inserting ``claimed, including any
person who engages in a pattern or practice of presenting or
causing to be presented a claim for an item or service that is
based on a code that the person knows or should know will
result in a greater payment to the person that the code the
person knows or should know is applicable to the item or
service actually provided''.
(f) Permitting Secretary to Impose Civil Money Penalty.--
Section 1128A(b) (42 U.S.C. 1320a-7a(b)) is amended by adding
the following new subparagraph:
``(3) Any person (including any organization, agency,
or other entity, but excluding a beneficiary as defined
in subsection (i)(5)) who the Secretary determines has
violated section 1128B(b) of this title shall be
subject to a civil monetary penalty of not more that
$10,000 for each such violation. In addition, such
person shall be subject to an assessment of not more
than twice the total amount of the remuneration
offered, paid, solicited, or received in violation of
section 1128B(b). The total amount of remuneration
subject to all assessments shall be calculated without
regard to whether some portion thereof also may have
been intended to serve a purpose other than one
proscribed by section 1128B(b).''.
(g) Prohibition Against Offering Inducements to Individuals
Enrolled Under Programs.--
(1) Offer of remuneration.--Section 1128A(a) (42
U.S.C. 1320a-7a(a)) as amended by subsection (b) of
this section, is amended--
(A) by striking ``or'' at the end of
paragraph (3) and inserting a semicolon;
(B) by inserting ``or'' after the semicolon
at the end of paragraph (4); and
(C) by inserting after paragraph (4) the
following new paragraph:
``(5) offers to or transfers remuneration to
any individual eligible for benefits under a
Federal health program that such person knows
or should know is likely to influence such
individual to order or receive from a
particular provider, practitioner, or supplier
any item or service for which payment may be
made, in whole or in part, under such
program;''.
(2) Remuneration defined.--Section 2238A(i) (42
U.S.C. 1320a-7a(i)) is amended by adding the following
new paragraph:
``(6) The term `remuneration' includes the waiver of
coinsurance and deductible amounts (or any part
thereof), and transfers of items or services for free
or for other than fair market value. The term
`remuneration' does not include--
``(A) the waiver of coinsurance and
deductible amounts by a person, if--
``(i) the waiver is not offered as
part of any advertisement or
solicitation;
``(ii) the person does not routinely
waive coinsurance or deductible
amounts; and
``(iii) the person--
``(I) waives the coinsurance
and deductible amount after
determining in good faith that
the individual is in financial
need;
``(II) fails to collect
coinsurance or deductible
amounts after making reasonable
collection efforts; or
(III) provides for any
permissible waiver as specified
in section 1128B(b)(3) or in
regulations issued by the
Secretary;
``(B) differentials in coinsurance and
deductible amounts as part of a benefit plan
design as long as the differentials have been
disclosed in writing to all beneficiaries,
third party payors, and providers, to whom
claims are presented and as long as the
differentials meet the standards as defined in
regulations promulgated by the Secretary not
later than 180 days after the date of the
enactment of this Act; or
``(C) incentives given to individuals to
promote the delivery of preventive care as
determined by the Secretary in regulations as
promulgated.''.
(h) Definition of Federal Health Care Program.--Section
1128A (42 U.S.C. 1320a-7b) is amended by adding at the end the
following new subsection:
``(m) Federal Health Care Program.--For purposes of this
section, the term `Federal health care program' means--
``(1) any plan or program (except a plan described in
section 3(1) of the Employee Retirement Income Security
Act) that provides health benefits, whether directly,
through insurance, or otherwise, which is funded, in
whole or in part, by the United States Government; or
``(2) any State health care program, as defined in
section 1128(h).''.
SEC. 11403. EXCLUSION OF PERSONS WHO DEFRAUD MEDICARE.
(a) Minimum Period of Exclusion for Certain Individuals and
Entities Subject to Permissive Exclusion From Medicare and
State Health Care Programs.--Section 1128(c)(3) (42 U.S.C.
1320a-7(c)(3)) is amended by adding at the end the following
new subparagraphs:
``(D) In the case of an exclusion of an individual or
entity under paragraph (1), (2), or (3) of subsection
(b), the period of the exclusion shall be 3 years,
unless the Secretary determines in accordance with
published regulations that a longer period is
appropriate because of aggravating circumstances.
``(E) In the case of an exclusion of an individual or
entity under subsection (b)(4) or (b)(5), the period of
the exclusion shall not be less than the period during
which the individual or entity's license to provide
health care is revoked, suspended, or surrendered, or
the individual or the entity is excluded or suspended
from a Federal or State health care program.
``(F) In the case of an exclusion of an individual or
entity under subsection (b)(6)(B), the period of the
exclusion shall be not less than 1 year.''.
(b) Permissive Exclusion of Individuals With Ownership or
Control Interest in Sanctioned Entities.--Section 1128(b) (42
U.S.C. 1320a-7(b)) is amended by adding at the end the
following new paragraph:
``(15) Individuals controlling a sanctioned entity.--
Any individual who has a direct or indirect ownership
or control interest of 5 percent or more, or an
ownership or control interest (as defined in section
1124(a)(3)) in, or who is an officer or managing
employee (as defined in section 1126(b)) of, an
entity--
``(A) that has been convicted of any offense
described in subsection (a) or in paragraph
(1), (2), or (3) of this subsection; or
``(B) that has been excluded from
participation under a program title XVIII or
under a State health care program.''.
(c) Sanctions Against Providers for Excessive Fees or
Prices.--Section 1128(b)(6)(A) (42 U.S.C. 1320a-7(b)(6)(A)) is
amended--
(1) by inserting after ``substantially in excess of
such individual's or entity's usual charges'' the
following: ``(as specified by the Secretary in
regulations)''; and
(2) by striking ``(or in applicable cases,
substantially in excess of such individuals or
entities' costs)'' and inserting ``, costs or fees''
before ``for such items or services.''.
(d) Applicability of the Bankruptcy Code To Program
Sanctions.--
(1) Section 1128 (42 U.S.C. 1320a-7) is amended by
adding at the end the following new subsection:
``(j) An exclusion imposed under this section
is not subject to the automatic stay imposed
under the Bankruptcy Code, 11 U.S.C.
Sec. 362.''.
(2) Section 1128A(a) (42 U.S.C. 1320a-7a) is amended
by adding at the end the following sentence: ``An
exclusion imposed under this section is not subject to
the automatic stay which is imposed under 11 U.S.C.
Sec. 362, and any penalties and assessments imposed
under this section shall be nondischargeable under the
Bankruptcy Code (11 U.S.C. Sec. 101 et seq.).''.
(3) Section 1892(a)(4) (42 U.S.C. 1395ccc(a)(4)) is
amended by adding at the end the following sentence:
``An exclusion imposed under paragraph (2)(C)(ii) or
paragraph (3)(B) is not subject to the automatic stay
which is imposed under the Bankruptcy Code (11 U.S.C.
Sec. 362).''.
SEC. 11404. ILLEGAL REMUNERATION WITH RESPECT TO HEALTH CARE BENEFIT
PROGRAMS.
(a) In General.--Chapter 11 of title 18, United States
Code, is amended by adding at the end the following:
``Sec. 227. Illegal remuneration with respect to health care benefit
programs
``(a) Whoever knowingly and willfully solicits or receives
any remuneration (including any kickback, bribe, or rebate)
directly or indirectly, overtly or covertly, in cash or in
kind--
``(1) in return for referring any individual to a
person for the furnishing or arranging for the
furnishing of any item or service for which payment may
be made in whole or in part by any health care benefit
program; or
``(2) in return for purchasing, leasing, ordering, or
arranging for or recommending purchasing, leasing or
ordering any good, facility, service, or item for which
payment may be made in whole or in part by any health
care benefit program, or attempting to do so,
shall be fined under this title or imprisoned for not more than
5 years, or both.
``(b) Whoever knowingly and willfully offers or pays any
remuneration (including any kickback, bribe, or rebate)
directly or indirectly, overtly, or covertly, in cash or in
kind to any person to induce such person--
``(1) to refer an individual to a person for the
furnishing or arranging for the furnishing of any item
or service for which payment may be made in whole or in
part by any health benefit program; or
``(2) to purchase, lease, order, or arrange for or
recommend purchasing, leasing, or ordering any good,
facility, service, or item for which payment may be
made in whole or in part by any health benefit program
or attempts to do so,
shall be fined under this title or imprisoned for not more than
5 years, or both.
``(c) Subsections (a) and (b) shall not apply to--
``(1) a discount or other reduction in price obtained
by a provider of services or other entity under a
health care benefit program if the reduction in price
is properly disclosed and appropriately reflected in
the costs claimed or charges made by the provider or
entity under a health care benefit program;
``(2) any amount paid by an employer to an employee
(who has a bona fide employment relationship with such
employer) for employment in the provision of covered
items or services if the amount of the remuneration
under the arrangement is consistent with the fair
market value of the services and is not determined in a
manner that takes into account (directly or indirectly)
the volume or value of any referrals;
``(3) any amount paid by a vendor of goods or
services to a person authorized to act as a purchasing
agent for a group of individuals or entities who are
furnishing services reimbursed under a health care
benefit program if--
``(A) the person has a written contract, with
each such individual or entity, which specifies
the amount to be paid the person, which amount
may be a fixed amount or a percentage of the
value of the purchases made by each such
individual or entity under the contract, and
``(B) in the case of an entity that is a
provider of services (as defined in section
1861(u) of the Social Security Act, the person
discloses (in such form and manner as the
Secretary of Health and Human Services
requires) to the entity and, upon request, to
the Secretary the amount received from each
such vendor with respect to purchases made by
or on behalf of the entity;
``(4) a waiver of any coinsurance under part B of
title XVIII of the Social Security Act by a federally
qualified health care center with respect to an
individual who qualifies for subsidized services under
a provision of the Public Health Service Act; and
``(5) any payment practice specified by the Secretary
of Health and Human Services in regulations promulgated
pursuant to section 14(a) of the Medicare and Medicaid
Patient and Program Protection act of 1987.
``(d) Any person injured in his business or property by
reason of a violation of this section or section 226 of this
title may sue therefor in any appropriate United States
district court and shall recover threefold the damages such
person sustains and the cost of the suit, including a
reasonable attorney's fee.
``(e) As used in this section, `health care benefit
program' has the meaning given such term in section 1347(b) of
this title.''.
(b) Clerical Amendment.--The table of sections at the
beginning of chapter 11 of title 18, United States Code, is
amended by adding at the end the following:
``227. Illegal remuneration with respect to health care benefit
programs.''.
(c) Conforming Amendment.--Section 1128B of the Social
Security Act (42 U.S.C. 1320a-7b) is amended by striking
subsection (b).
SEC. 11405. AMENDMENTS TO PRO (QUALITY OF CARE) SANCTIONS PROVISIONS.
(a) Minumum Period of Exclusion for Practitioners and
Persons Failing To Meet Statutory Obligations.--
(1) In general.--Section 1156(b)(1) (42 U.S.C. 1320c-
5(b)(1)) is amended in the second sentence by striking
``may prescribe)'' and inserting ``may prescribe,
except that such period may not be less than 1
year).''.
(2) Conforming amendment.--Section 1156(b)(2) (42
U.S.C. 1320c-5(b)(2)) is amended by striking ``shall
remain'' and inserting ``shall (subject to the minimum
period specified in the second sentence of paragraph
(1)) remain''.
(b) Repeal of ``Unwilling or Unable'' Condition for
Imposition of Sanction.--Section 1156(b)(1) (42 U.S.C. 1320c-
5(b)(1) is amended--
(1) in the second sentence, by striking ``and
determines'' and all that follows through ``such
obligations,''; and
(2) by striking the third sentence.
(c) Sanctions Against Practitioners and Persons for Failure
To Comply With Statutory Obligations.--Section 1156(b)(3) (42
U.S.C. 1320c-5(b)(3)) is amended by striking ``the actual or
estimated cost'' and inserting ``up to $10,000 for each
instance.''
SEC. 11406. FINAL ADVERSE ACTION DATA BASE.
(a) General Purpose.--Not later than January 1, 1997, the
Secretary of Health and Human Services (in this section
referred to as the ``Secretary'') shall establish a national
health care fraud and abuse data collection program or the
reporting of final adverse actions against health care
providers, suppliers, or practitioners as required by
subsection (b), with access as set forth in subsection (c).
(b) Reporting of Information.--
(1) In general.--Each government agency and Federal
health care program shall (and each other health plan
may) report to the Secretary any final adverse action
taken against a health care provider, supplier, or
practitioner.
(2) Information to be reported.--The information to
be reported under paragraph (1) includes:
(A) The name and TIN (as defined in section
7701(a)(41) of the Internal Revenue Code of
1986) of--
(i) any health care provider,
supplier, or practitioner that is the
subject of a final adverse action, and
(ii) any individual with a
relationship specified in section
1128(b)(8)(A) to an entity described in
clause (i).
(B) The name (if know) of any health care
entity with which a health care provider,
supplier, or practitioner is affiliated or
associated.
(C) The nature of the final adverse action
and whether such action is on appeal.
(D) A description of the acts of omissions
and injuries upon which the final adverse
action was based, and such other information as
the Secretary determines by regulation is
required for appropriate interpretation of
information reported under this section.
(3) Confidentiality.--In determining what information
is required, the Secretary shall include procedures to
ensure that the privacy of individuals receiving health
care services is appropriately protected.
(4) Timing and form of reporting.--The information
required to be reported under this subsection shall be
reported regularly (but less often than monthly) and in
such form and manner as the Secretary prescribes. Such
information shall first be required to be reported on a
date specified by the Secretary.
(c) Disclosure and Correction of Information.--
(1) Disclosure.--With respect to the information
about final adverse actions reported to the Secretary
under this section respecting a health care provider,
supplier, or practitioner, the Secretary shall, by
regulation, provide for--
(A) disclosure of the information, upon
request, to the health care provider, supplier,
or licensed practitioner, and
(B) procedures in the case of disputed
accuracy of the information.
(2) Corrections.--Each Government agency and health
plan shall report corrections of information already
reported about any final adverse action taken against a
health care provider, supplier, or practitioner, in
such form and manner that the Secretary prescribes by
regulation.
(d) Access to Reported Information.--
(1) Availability.--The information in this database
shall be available to Federal and State government
agencies, health plans, and the public pursuant to
procedures that the Secretary shall provide by
regulation.
(2) Fees for disclosure.--The Secretary may establish
or approve reasonable fees for the disclosure of
information in this database (other than with respect
to requests by Federal agencies). The amount of such a
fee may be sufficient to recover the full costs of
carrying out the provisions of this section, including
reporting, disclosure and administration. Such fees
shall be available to the Secretary or, in the
Secretary's discretion to the agency designated under
this section to cover such costs.
(e) Protection From Liability for Reporting.--No person or
entity, including the agency designated by the Secretary in
subsection (b)(5) shall be held liable in any civil action with
respect to any report made as required by this section, without
knowledge of the falsity of the information contained in the
report.
(f) Definitions and Special Rules.--For purposes of this
section:
(1)(A) The term ``final adverse action'' includes:
(i) Civil judgments against a health care
provider or practitioner in Federal or State
court related to the delivery of a health care
item or service.
(ii) Federal or State criminal convictions
related to the delivery of a health care item
or service.
(iii) Actions by Federal or State agencies
responsible for the licensing and
certifications of health care providers,
suppliers, and licensed health care
practitioners, including--
(I) formal or official actions, such
as revocation or suspension of a
license (and the length of any such
suspension), reprimand, censure or
probation,
(II) any other loss of license, or
the right to apply for or renew a
license of the provider, supplier, or
practitioner, whether by operation of
law, voluntary surrender, non-renewable
or otherwise, or
(III) any other negative action or
finding by such Federal or State agency
that, is publicly available
information.
(iv) Exclusion from participation in Federal
or State health care programs.
(v) Any other adjudicated actions or
decisions that the Secretary shall establish by
regulation.
(B) The term does not include any action with respect
to a malpractice claim.
(2) The terms ``licensed health care practitioner'',
``licensed practitioner'', and ``practitioner'' mean,
with respect to a State, an individual who is licensed
or otherwise authorized by the State to provide health
care services (or any individual who, without authority
holds himself or herself out to be so licensed or
authorized).
(3) The term ``health care provider'' means a
provider of services as defined in section 1861(u) of
the Social Security Act, and any person or entity,
including a health maintenance organization, group
medical practice, or any other entity listed by the
Secretary in regulation, that provides health care
services.
(4) The term ``supplier'' means a supplier of health
care items and services described in section 1819(a)
and (b), and section 1861 of the Social Security Act.
(5) The term ``Government agency'' shall include:
(A) The Department of Justice.
(B) The Department of Health and Human
Services.
(C) Any other Federal agency that either
administers or provides payment for the
delivery of health care services, including,
but not limited to the Department of Defense
and the Veterans' Administration.
(D) State law enforcement agencies.
(E) State medicaid fraud and abuse units.
(F) Federal or State agencies responsible for
the licensing and certification of health care
providers and licensed health care
practitioners.
(6) the term ``Federal health care program'' has the
meaning given such term in section 1128B(b) of the
Social Security Act.
(7) The term ``health plan'' has the meaning given
such term in section 1347 of title 18 of the United
States Code.
(8) For purposes of paragraph (1), the existence of a
conviction shall be determined under section 1128 of
the Social Security Act.
(g) Conforming Amendment.--Section 1921(d) (42 U.S.C.
1396r-2(d)) is amended by inserting ``and section 105 of the
Federal Health Care Payment Integrity Act of 1995 after
``section 422 of the Health Care Quality Improvement Act of
1986''.
SEC. 11407. EXPANSION OF AUTHORITY OF MEDICAID FRAUD CONTROL UNITS.
(a) Extension of Concurrent Authority To Investigate and
Prosecute Fraud in Other Federal Programs.--Section 1903(q)(3)
(42 U.S.C. 1396b(q)(3)) is amended by striking ``in connection
with'' and all that follows and inserting the following:
``in connection with--
``(A) any aspect of the provision of medical
assistance and the activities of providers of
such assistance under the State plan under this
title; and
``(B) (in cases where the entity's function
is also described by subparagraph (A), and upon
the approval of the relevant Federal agency)
any aspect of the provision of health care
services and activities of providers of such
services under any Federal health care program
(as defined in section 1128B(b)(1)).''.
(b) Extension of Authority To Investigate and Prosecute
Patient Abuse in Non-Medicaid Board and Care Facilities.--
Section 1903(q)(4) (42 U.S.C. 1396(b)(q)(4)) is amended to read
as follows:
``(4)(A) The entity has--
``(i) procedures for reviewing complaints of
abuse or neglect of patients in health care
facilities which receive payments under the
State plan under this title;
``(ii) at the option of the entity,
procedures for reviewing complaints of abuse or
neglect of patients residing in board and care
facilities; and
``(iii) procedures for acting upon such
complaints under the criminal laws of the State
or for referring such complaints to other State
agencies for action.
``(B) For purposes of this paragraph, the term `board
and care facility' means a residential setting which
receives payment from or on behalf of two or more
unrelated adults who reside in such facility, and for
whom one or both of the following is provided:
``(i) Nursing care services provided by, or
under the supervision of, a registered nurse,
licensed practical nurse, or licensed nursing
assistant.
``(ii) Personal care services that assist
residents with the activities of daily living,
including personal hygiene, dressing, bathing,
eating, toileting, ambulation, transfer,
positioning, self-medication, body care, travel
to medical services, essential shopping, meal
preparation, laundry, and housework.''.
(c) Authority of Inspectors General.--Nothing in this Act
affects the authority of the Inspectors General of the
Department of Veterans Affairs, the Department of Defense, and
other health care agencies under the Inspector General Act of
1978 to conduct investigations, audits, inspections, and
evaluations of programs and operations of their respective
agencies, including health care programs and operations.
SEC. 11408. RECOVERY OF MEDICARE OVERPAYMENTS FROM BANKRUPT PROVIDERS.
(a) Medicare Part A.--Section 1815(d) (42 U.S.C. 1395g(d))
is amended by adding at the end the following sentence:
``Amounts due to the program under this part are not
dischargeable under any title of the Bankruptcy Code (11 U.S.C.
101 et seq.).''.
(b) Medicare Part B.--Section 1833(j) (42 U.S.C. 13951(j))
is amended by adding at the end the following sentence:
``Amounts due to the program under this part are not
dischargeable under any title of the Bankruptcy Code (11 U.S.C.
101 et seq.).''.
SEC. 11409. GRANTS TO STATES TO REVOKE LICENSES OF UNQUALIFIED
PROVIDERS.
The Secretary of Health and Human Services is authorized to
make grants to States for activities necessary to revoke the
licenses, certification, or other State authorization of health
care professionals and entities determined to be unqualified
for such authorization on the basis of exclusion from Federal
health care programs under section 1128 or 1128A or for any
other reason.
SEC. 11410. AUTHORIZATION FOR INTERCEPTION OF WIRE, ORAL OR ELECTRONIC
COMMUNICATIONS.
(a) Section 2516(1)(c) of title 18, United States Code, is
amended--
(1) by inserting ``section 226 (bribery and graft in
connection with health care), section 227 (illegal
remunerations,'' after ``section 224 (bribery in
sporting contests),''; and
(2) by inserting ``section 1347 (health care
fraud),'' after ``section 1344 (relating to bank
fraud),''.
(b) Definitions.--Section 1961(1) of title 18, United
States Code, is amended--
(1) by inserting ``sections 226 and 227 (relating to
bribery and graft, and illegal remuneration in
connection with health care),'' after ``section 224
(relating to sports bribery),'';
(2) by inserting ``section 669 (relating to theft or
embezzlement in connection with health care),'' after
``section 664 (relating to embezzlement from pension
and welfare funds),''; and
(3) by inserting ``section 1347 (relating to health
care fraud),'' after ``section 1344 (relating to
financial institution fraud),''.
PART 2--RESOURCES FOR ANTI-FRAUD ACTIVITIES
SEC. 11421. HEALTH CARE FINANCING ADMINISTRATION AND HHS INSPECTOR
GENERAL FUNDING.
(a) Findings and Statement of Purpose.--
(1) Findings.--The Congress finds that--
(A) a significant amount of funds expended on
the Medicare program are lost to fraud,
medically unnecessary services and other abuse;
and
(B) The Department of Health and Human
Services through activities of the Office of
Inspector General and Health Care Financing
Administration is effective in combating
Medicare fraud and abuse and returning misspent
funds to the Federal Treasury.
(2) Purpose.--It is the purpose of this Act to--
(A) protect, to the maximum extent
practicable, the Medicare and Medicaid programs
from further losses due to fraud and abuse;
(B) test methods by which the savings that
these activities generate can be properly
accounted for when determining funding levels;
and
(C) ensure an adequate source of five-year
funding for HHS Medicare anti-fraud and abuse
activities.
(b) Establishment of Medicare Anti-Fraud and Abuse
Program.--Title XI (42 U.S.C. 1301 et seq.) is amended by
adding at the end thereof the following new part:
``Part C--Medicare Anti-Fraud and Abuse Program
``purpose
``Sec. 1171. The purpose of this part is to provide funding
for activities of the Office of Inspector General related to
preventing and detecting fraud and abuse in the programs under
title XVIII and determining the accuracy and appropriateness of
expenditures under such programs.
``funding available
``Sec. 1172. (a) Covered Anti-Fraud and Abuse Activities.--
Funding from the trust funds established under title XVIII
shall be available, in accordance with subsection (b), for
activities conducted by the Inspector General, either directly
or by contract, pursuant to this Act or the Inspector General
Act of 1978, for the purposes of--
``(1) Prosecuting matters related to the programs
under title XVIII through criminal, civil, and
administrative proceedings.
``(2) Conducting investigations relating to such
programs.
``(3) Performing financial and performance audits of
programs and operations relating to the such programs.
``(4) Performing inspections and other evaluations
relating to such programs.
``(5) Conducting provider and consumer education
activities regarding the requirements of this title and
title XVIII.
``(b) Payments From Trust Funds.--Obligations incurred by
the Inspector General in carrying out the activities designated
in subsection (a) shall be paid from--
``(1) funds in the Federal Hospital Insurance Trust
Fund; and
``(2) funds in the Federal Supplementary Medical
Insurance Trust Fund, in the amounts set forth in
subsection (c), allocated between those funds as the
Secretary shall deem fair and equitable after taking
into consideration the expenses attributable to each of
the programs under title XVIII. The Secretary shall
make such transfers of moneys between those funds as
may be appropriate to settle accounts between them in
cases where expenses properly payable from one fund
have been paid from the other fund.
``(c) Payment Amounts.--Total amounts paid from the Trust
Funds in accordance with subsection (b) shall equal--
``(1) $130 million for fiscal year 1996;
``(2) $181 million for fiscal year 1997;
``(3) $204 million for fiscal year 1998;
``(4) $223 million for fiscal year 1999; and
``(5) $244 million for fiscal year 2000.''.
SEC. 11422. ESTABLISHMENT OF THE MEDICARE BENEFICIARY INTEGRITY SYSTEM.
(a) In General.--Part C of title XVIII (42 U.S.C. 1395x et
seq.) is amended by inserting after section 1889 the following:
``beneficiary integrity system
``Sec. 1890. (a) Obligations incurred for beneficiary
integrity system activities for each of fiscal years 1996
through 2000 shall be paid from funds in the Federal Hospital
Insurance Trust Fund and the Federal Supplementary Medical
Insurance Trust Fund, in the amounts set forth in subsection
(b), allocated between those funds as the Secretary shall deem
fair and equitable after taking into consideration the expenses
attributable to each of the programs under this title. The
Secretary shall make such transfers or moneys between those
funds as may be appropriate to settle accounts between them in
cases where expenses properly payable from one fund have been
paid from the other fund.
``(b) Total amounts paid from the Trust Funds in accordance
with subsection (a) shall equal--
``(1) $430,000,000 for fiscal year 1996,
``(2) $490,000,000 for fiscal year 1997,
``(3) $550,000,000 for fiscal year 1998,
``(4) $620,000,000 for fiscal year 1999, and
``(5) $670,000,000 for fiscal year 2000.
``(c) For purposes of this section, beneficiary integrity
system activities consist of the following:
``(1) Review of activities of providers of services
or other persons in connection with this title,
including medical and utilization review and fraud
review.
``(2) Audit of cost reports.
``(3) Determination as to whether payment should not
be, or should not have been, made under this title by
reason of section 1862(b), and recovery of payments
that should not have been made.
``(4) Education of providers of services,
beneficiaries, and other persons with respect to
payment integrity and beneficiary integrity system
issues.''.
(b) Effective Date.--The amendment made by subsection (a)
applies to obligations incurred after fiscal year 1995.
SEC. 11423. GOVERNMENT-WIDE ANTI-FRAUD REINVESTMENT FUND.
(a) Establishment.--
(1) In general.--There is hereby established the
Health Care Fraud and Abuse Control Account. The Health
Care Fraud and Abuse Control Account shall consist of--
(A) such gifts and bequests as may be made as
provided in subparagraph (B);
(B) such amounts as may be deposited in the
Health Care Fraud and Abuse Control Account as
provided in title XI of the Social Security
Act; and
(C) such amounts as are transferred to the
Health Care Fraud and Abuse Control Account
under paragraph (3), but in no year shall more
than $10 million be transferred or otherwise
deposited to the Health Care Fraud and Abuse
Control Account.
(2) Authorization to accept gifts.--The Health Care
Fraud and Abuse Control Account is authorized to accept
on behalf of the United States money gifts and bequests
made unconditionally to the Health Care Fraud and Abuse
Control Account for the benefit of the Health Care
Fraud and Abuse Control Program or any activity
financed through the Health Care Fraud and Abuse
Control Account, but not to exceed $10 million.
(3) Transfer of amounts.--The Secretary of the
Treasury shall transfer to the Health Care Fraud and
Abuse Control Account, under rules similar to the rules
in section 9601 of the Internal Revenue Code of 1986,
an amount equal to the sum of the following:
(A) Civil monetary penalties and assessments
recovered (including voluntary settlement
agreements) under titles XI, XVIII, and XIX of
the Social Security Act (except as otherwise
provided by law); the Program Fraud Civil
Remedies Act (31 U.S.C. 3801 et seq.) and other
civil monetary penalties and assessments
imposed in health care cases.
(B) Penalties and damages otherwise
creditable to Miscellaneous Receipts, Treasury,
obtained (including voluntary settlement
agreements) under the False Claims Act (31
U.S.C. 3729 et seq.), in cases involving claims
related to the provision of health care items
and services (other than funds awarded to a
relator or for the damages sustained by the
health plan because of the acts governed by
section 3729).
(b) General Use of Funds.--
(1) In general.--Amounts in the Health Care Fraud and
Abuse Control Account shall be paid, at the discretion
jointly of the Attorney General and the Secretary of
Health and Human Services (acting through the Inspector
General of the Department of Health and Human Services)
to cover the costs (including equipment, salaries and
benefits, and travel and training) of activities
designed to prevent and detect health care fraud and
abuse, and to promote economy and efficiency in Federal
health care programs, such as health care fraud
investigations, audits, and inspections, including the
costs of--
(A) prosecuting health care matters (through
criminal, civil, and administrative
proceedings);
(B) investigations;
(C) financial and performance audits of
health care programs and operations;
(D) inspections and other evaluations; and
(E) provider and consumer education regarding
compliance with the provisions of this title.
(2) ERISA plans.--Any recoveries in connection with
an employee welfare benefit plan as defined in section
3 of the Employee Retirement Income Security Act of
1974 (18 U.S.C. 1002) shall first be used to make whole
participants and beneficiaries of the employee welfare
benefit plan.
(3) Funds used to supplement agency appropriations.--
It is intended that disbursements made from the Health
Care Fraud and Abuse control Account be fairly
apportioned among all Federal health care agencies and
be used to increase and not supplant the recipient
agency's appropriated operating budget.
(4) Annual report.--The Secretary and the Attorney
General shall submit jointly an annual report to
Congress on the amount of revenue which is generated
and disbursed by the Health Care Fraud and Abuse
Control Account in each fiscal year.
PART 3--AMENDMENTS TO CRIMINAL LAW
SEC. 11431. HEALTH CARE FRAUD.
In General.--
(1) Fines and imprisonment for health care fraud
violations.--Chapter 63 of title 18, United States
Code, is amended by adding at the end the following new
section:
``Sec. 1347. Health care fraud.
``(a) Whoever knowingly and willfully executes, or attempts
to execute, a scheme or artifice--
``(1) to defraud any health plan or other person, in
connection with the delivery of or payment for health
care benefits, items, or services; or
``(2) to obtain, by means of false or fraudulent
pretenses, representations, or promises, any of the
money or property owned by, or under the custody or
control of, any health plan, or person in connection
with the delivery of or payment for health care
benefits, items, and services;
shall be fined under this title or imprisoned not more than 10
years, or both. If the violation results in serious bodily
injury (as defined in section 1365(g)(3) of this title), such
person may be imprisoned for any term of years.
``(b) For purposes of this section, the term ` health plan
means a plan or program that provides health benefits, whether
directly, through insurance, or otherwise, and includes--
``(1) a policy of health insurance;
``(2) a contract of a service benefit organization;
``(3) a membership agreement with a health
maintenance organization or other prepaid health plan;
and
``(4) an employee welfare benefit plan or a multiple
employer welfare arrangement (as those terms are
defined in section 3 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1002).''.
(2) Clerical Amendment.--The table of sections at the
beginning of chapter 63 of title 18, United States
Code, is amended by adding at the end the following:
``1347. Health care fraud.''.
SEC. 11432. FORFEITURES FOR FEDERAL HEALTH CARE OFFENSES.
In General.--Section 982(a) of title 18, United States
Code, is amended by adding after paragraph (5) the following
new paragraph:
``(6)(A) the court, in imposing sentence on a person
convicted of a Federal health care offense, shall order
the person to forfeit property, real or personal, that
constitutes or is derived, directly or indirectly, from
proceeds traceable to the commission of the offense.
``(B) For purposes of this paragraph, the term
`Federal health care offense' means a violation of, or
a criminal conspiracy to violate--
``(i) section 1347 of this title;
``(ii) section 1128B of the Social Security
Act;
``(iii) sections 287, 371, 664, 666, 1001,
1027, 1341, 1343, 1920, of 1954 of this title
if the violation or conspiracy relates to
health care fraud; or
``(iv) section 501 or 511 of the Employee
Retirement Income Security Act of 1974, if the
violation or conspiracy relates to health care
fraud.''.
SEC. 11433. INJUNCTIVE RELIEF RELATING TO FEDERAL HEALTH CARE OFFENSES.
(a) In General.--Section 1345(a)(1) of title 18, United
States Code, is amended--
(1) by striking ``or'' at the end of subparagraph
(A);
(2) by inserting ``or'' at the end of subparagraph
(B); and
(3) by adding at the end the following new
subparagraph:
``(C) committing or about to commit a Federal
health care offense (as defined in section
982(a)(6)(B) of this title);''.
(b) Freezing of Assets.--Section 1345(a)(2) of title 18,
United States Code, is amended by inserting ``or a Federal
health care offense (as defined in section 982(a)(6)(B))''
after ``title)''.
SEC. 11434. GRAND JURY DISCLOSURE.
Section 3322 of title 18, United States Code, is amended--
(1) by redesignating subsections (c) and (d) as
subsections (d) and (e), respectively; and
(2) by inserting after subsection (b) the following
new subsection:
``(c) A person who is privy to grand jury information
concerning a Federal health care offense (as defined in section
982(a)(6)(B))--
``(1) received in the course of duty as an attorney
for the Government; or
``(2) disclosed under rule 6(a)(3)(A)(ii) of the
Federal Rules of Criminal Procedure;
may disclose that information to an attorney for the
Government to use in any investigation or civil
proceeding relating to health care fraud.''.
SEC. 11435. FALSE STATEMENTS.
(a) In General.--Chapter 47 of title 18, United States
Code, is amended by adding at the end the following new
section:
``Sec. 1033. False statements relating to health care matters
``(a) Whoever, in any matter involving a health plan,
knowingly and willfully falsifies, conceals, or covers up by
any trick, scheme, or device a material fact, or makes any
false, fictitious, or fraudulent statements or representations,
or makes or uses any false writing or document knowing the same
to contain any false, fictitious, or fraudulent statement or
entry, shall be fined under this title or imprisoned not more
than 5 years, or both.
``(b) For purposes of this section, the term `health plan'
has the meaning given such term in section 1347(b).''.
(b) Clerical Amendment.--The table of sections at the
beginning of chapter 47 of title 18, United States Code, is
amended by adding at the end the following:
``1033. False statements relating to health care matters.''.
SEC. 11436. OBSTRUCTION OF CRIMINAL INVESTIGATIONS, AUDITS OR
INSPECTIONS OF FEDERAL HEALTH CARE OFFENSES.
(a) In General.--Chapter 73 of title 18, United States
Code, is amended by adding at the end the following new
section:
``Sec. 1518. Obstruction of criminal investigations, audits or
inspections of Federal health care offenses.
``(a) In General.--Whoever willfully prevents, obstructs,
misleads, delays or attempts to present, obstruct, mislead, or
delay the communication of information or records relating to a
Federal health care offense to a Federal agent or employee
involved in the investigation, audit, inspection or other
related activity shall be fined under this title or imprisoned
not more than 5 years, or both.
``(b) Federal Health Care Offense.--As used in this section
the term `Federal health care offense' has the same meaning
given such term in section 982(a)(6)(B) of this title.
``(c) Criminal Investigator.--As used in this section the
term `criminal investigator' means any individual duly
authorized by a department, agency, or armed force of the
Untied States to conduct or engage in investigations for
prosecutions for violations of health care offenses.''.
(b) Clerical Amendment.--The table of sections at the
beginning of chapter 73 of title 18, United States Code, is
amended by adding at the end the following:
``1518. Obstruction of Criminal Investigations, Audits, or Inspections
of Federal Health Care Offenses.''.
SEC. 11437. THEFT OR EMBEZZLEMENT.
(a) In General.--Chapter 31 of title 18, United States
Code, is amended by adding at the end the following new
section: ``Sec. 669. Theft or embezzlement in connection with
health care.
``(a) In General.--Whoever willfully embezzles, steals, or
otherwise without authority willfully and unlawfully converts
to the use of any person other than the rightful owner, or
intentionally misapplies any of the moneys, funds, securities,
premiums, credits, property, or other assets of a health plan,
shall be fined under this title or imprisoned not more than 10
years, or both.
``(b) Health Plan.--As, used in this section the term
`health plan' has the meaning given such term in section
1347(b).''.
(b) Clerical Amendment.--The table of sections at the
beginning of chapter 31 of title 18, United States Code, is
amended by adding at the end the following:
``669. Theft or Embezzlement in Connection with Health care.''.
SEC. 11438. LAUNDERING OF MONETARY INSTRUMENTS.
Section 1956(c)(7) of title 18, United States Code, is
amended by adding at the end the following new subparagraph:
``(F) Any act or activity constituting an offense
involving a Federal health care offense as that term is
defined in section 982(a)(6)(B) of this title.''.
SEC. 11439. AUTHORIZED INVESTIGATIVE DEMAND PROCEDURES.
(a) In General.--Chapter 233 of title 18, United States
Code, is amended by adding after section 3485 the following new
section:
``Sec. 3486. Authorized investigative demand procedures.
``(a) Authorization.--
``(1) In any investigation relating to functions set
forth in paragraph (2), the Attorney General or
designee may issue in writing and cause to be served a
subpoena compelling production of any records
(including any books, papers, documents, electronic
media, or other objects or tangible things), which may
be relevant to an authorized law enforcement inquiry,
that a person or legal entity may possess or have care,
custody, or control. A custodian of records may be
required to give testimony concerning the production
and authentication of such records. The production of
records may be required from any place in any State or
in any territory, or other place subject to the
jurisdiction of the United States at any designated
place; except that such production shall not be
required more than 500 miles distant from the place
where the subpoena is served. Witnesses summoned under
this section shall be paid the same fees and mileage
that are paid witnesses in the courts of the United
States. A subpoena requiring the production of records
shall describe the objects required to be produced and
prescribe a return date within a reasonable period of
time within which the objects can be assembled and made
available.
``(2) Investigative demands utilizing an
administrative subpoena are authorized for any
investigation with respect to any act or activity
constituting or involving health car fraud, including a
scheme or artifice--
``(A) to defraud any health plan or other
person, in connection with the delivery of or
payment for health care benefits, items, or
services; or
``(B) to obtain, by means of false or
fraudulent pretenses, representations, or
promises, any of the money or property owned
by, or under the custody or control or, any
health plan, or person in connection with the
delivery of or payment for health care
benefits, items, or services.
``(b) Service.--A subpoena issued under this section may be
served by any person designated in the subpoena to serve it.
Service upon a natural person may be made by personal delivery
of the subpoena to such person. Service may be made upon a
domestic or foreign association which is subject to suit under
a common name, by delivering the subpoena to an officer, to a
managing or general agent, or to any other agency authorized by
appointment or by law to receive service of process. The
affidavit of the person serving the subpoena entered on a true
copy thereof by the person serving it shall be proof of
service.
``(c) Enforcement.--In the case of contumacy by or refusal
to obey a subpoena issued to any person, the Attorney General
may invoke the aid of any court of the United States within the
Jurisdiction of which the investigation is carried on or of
which the subpoenaed person is an inhabitant, or in which such
person carries on business or may be found, to compel
compliance with the subpoena. The court may issue an order
requiring the subpoenaed person to appear before the Attorney
General to produce records, if so ordered, or to give testimony
touching the matter under investigation. Any failure to obey
the order of the court may be punished by the court as a
contempt thereof. All process in any such case may be served in
any Judicial district in which such person may be found.
``(d) Immunity From Civil Liability.--Notwithstanding any
Federal, State, or local law, any person, including officers,
agents, and employees receiving a subpoena under this section,
who complies in good faith with the subpoena and thus produces
the materials sought, shall not be liable in any court of any
State or the United States to any customer or other persons for
such production or for nondisclosure of that production to the
customer.
``(e) Use in Action Against Individuals.--
``(1) Health information about an individual that is
disclosed under this section may not be used in, or
disclosed to any person for use in, any administrative,
civil, or criminal action or investigation directed
against the individual who is the subject of the
information unless the action or investigation arises
out of and is directly related to receipt of health
care or payment for health care or action involving a
fraudulent claim related to health; or if authorized by
an appropriate order of a court of competent
jurisdiction, granted after application showing good
cause therefore.
``(2) In assessing good cause, the court shall weigh
the public interest and the need for disclosure against
the injury to the patient, to the physician-patient
relationship, and to the treatment services.
``(3) Upon the granting of such order, the court, in
determining the extent to which any disclosure of all
or any part of any record is necessary, shall impose
appropriate safeguards against unauthorized disclosure.
``(f) Health Plan.--As used in this section the term
`health plan' has the meaning given such term in section
1347(b).''.
(b) Clerical Amendment.--The table of sections for chapter
223 of title 18, United States Code, is amended by inserting
after the item relating to section 3405 the following new item:
Sec. 3486. Authorized investigative demand procedures''.
(c) Conforming Amendment.--Section 1510(b)(3)(B) of title
18, United States Code, is amended by inserting ``or a
Department of Justice subpoena (issued under section 3486),''
after ``subpoena''.
PART 4--MEDICARE IMPROVEMENTS
Subpart A--Coordination of Benefits
SEC. 11441. CLARIFICATION OF TIME AND FILING LIMITATIONS.
(a) In General.--Section 1862(b)(2)(B) (42 U.S.C.
1395y(b)(2)(B)) is amended by adding at the end of the
following:
``(v) Time, filing, and related provisions
under primary plan.--Requirements under a
primary plan as to the filing of a claim, time
limitations for the filing of a claim,
information not maintained by the Secretary, or
notification or pre-admission review, shall not
apply to a claim by the United States under
clause (ii) or (iii).''.
(b) Effective Date.--The amendment made by subsection (a)
applies to items and services furnished after 1990.
SEC. 11442. CLARIFICATION OF LIABILITY OF THIRD PARTY ADMINISTRATORS.
(a) In General.--Section 1862(b)(2)(B)(ii) (42 U.S.C.
1395(b)(2)(B)(ii)) is amended by inserting ``, or which
determines claims under the primary plan'' after ``primary
plan''.
(b) Claims Between Parties Other Than the United States.--
Section 1862(b)(2)(B) (42 U.S.C. 1395y(b)(2)(B)) (as amended by
section 11441(a) of this Act) is further amended by adding at
the end the following:
``(vi) Claims between parties other than the united
states.--A claim by the United States under clause (ii)
or (iii) shall not preclude claims between other
parties.''.
(c) Effective Date.--The amendments made by the previous
subsections apply to items and services furnished after 1990.
SEC. 11443. CLARIFICATION OF PAYMENT AMOUNTS TO MEDICARE.
(a) In General.--Section 1862(b)(2)(B)(i) (42 U.S.C.
1395y(b)(2)(B)(i)) is amended to read as follows:
``(i) Repayment required.--
``(I) Any payment under this title, with
respect to any item or service for which
payment by a primary plan is required under the
preceding provisions of this subsection, shall
be conditioned on reimbursement to the
appropriate Trust Fund established by this
title when notice or other information is
received that payment for that item or service
has been or should have been made under those
provisions. If reimbursement is not made to the
appropriate Trust Fund before the expiration of
the 60-day period that begins on the date such
notice or other information is received, the
Secretary may charge interest (beginning with
the date on which the notice or other
information is received) on the amount of the
reimbursement until reimbursement is made (at a
rate determined by the Secretary in accordance
with regulations of the Secretary of the
Treasury applicable to charges for late
payments).
``(II) The amount owned by a primary plan
under the first sentence of subclause (I) is
the lesser of the full primary payment required
(if that amount is readily determinable) and
the amount paid under this title for that item
or service.''.
(b) Conforming and Technical Amendments.--
(1) Subparagraphs (A)(i)(I) and (B)(i) of section
1862(b)(1) (42 U.S.C. 1395y(b)(1)) are each amended by
inserting ``(or eligible to be covered)'' after
``covered''.
(2) Section 1862(b)(1)(C)(ii) (42 U.S.C.
1395y(b)(1)(C)(ii)) is amended by striking ``covered by
such plan''.
(3) The matter in section 1862(b)(2)(A) (42 U.S.C.
1395y(b)(2)(A)) preceding clause (i) is amended by
striking ``, except as provided in subparagraph (B),''.
(c) Effective Date.--The amendments made by the previous
subsections apply to items and services furnished after 1990.
SEC. 11444. CONDITIONS FOR DOUBLE DAMAGES.
(a) In General.--Section 1862(b)(2)(B)(ii) (42 U.S.C.
1395y(b)(2)(B)(ii)) is amended--
(1) by striking ``, in accordance with paragraph
(3)(A)'', and
(2) by inserting ``, unless the entity demonstrates
that it did not know, and could not have known, of its
obligation to pay'' after ``against that entity.''
(b) Conforming Amendment.--Section 1862(b)(3)(A) is amended
by striking ``(or appropriate reimbursement)''.
SEC. 11445. REPEAL OF EXCISE TAX.
(a) In General.--Chapter 47 of the Internal Revenue Code of
1986 (26 U.S.C. 5000) is repealed.
(b) Conforming Amendment to the Internal Revenue Code of
1986.--The table of chapters of subtitle D of the Internal
Revenue Code of 1986 (26 U.S.C. 4001 et seq.) is amended by
striking the listing for chapter 47.
(c) Conforming Amendments to the Social Security Act.--
(1) Section 1862(b)(1)(A) (42 U.S.C. 1395y(b)(1)(A))
is amended by striking clause (v).
(2) The matter in section 1862(b)(1)(C) (42 U.S.C.
1395y(b)(1)(C)) preceding clause (i) is amended by
striking ``plan (as defined in subparagraph (A)(v))--''
and inserting ``plan--''.
(3) Section 1862(b)(1)(E) (42 U.S.C. 1395y(b)(1)(E))
is amended by adding at the end the following:
``(iv) Group health plan defined.--The term
`group health plan' means a plan (including a
self-insured plan) of, or contributed to by, an
employer or employee organization to provide
health care (directly or otherwise) to the
employees, former employees, the employer,
others associated or formerly associated with
the employer in a business relationship, or
their families.''.
(4) Section 1862(b)(3) (42 U.S.C. 1395y(b)(3)) is
amended--
(A) by striking subparagraph (B), and
(B) by redesignating subparagraph (C) as (B).
(5) Subparagraph (A) of the first sentence of section
1837(i)(1) (42 U.S.C. 1395p(i)(1)), subparagraph (B) of
the first sentence of section 1837(i)(2) (42 U.S.C.
1395p(i)(2)), section 1837(i)(3)(A) (42 U.S.C.
1395p(i)(3)(A)), and clause (2) of the second sentence
of section 1839(b) (42 U.S.C. 1395r(b)), are each
amended by striking ``1862(b)(1)(A)(v)'' and inserting
``1862(b)(1)(E)(iv)''.
(d) Effective Date.--The amendment made by subsection (a)
applies, with respect to the Internal Revenue Code of 1986, to
expenses incurred after 1994.
SEC. 11446. INFORMATION REQUIREMENTS.
(a) Information From Group Health Plans.--Section 1862(b)
(42 U.S.C. 1395y(b)) is amended by adding at the end the
following:
``(7) Information from group health plans.--
``(A) Provision of information by group
health plans.--The administrator of a group
health plan (other than a plan exempt, under
paragraph (1)(E)(v), from the requirements of
paragraph (1)) shall provide to the Secretary
any or all of the information elements listed
in subparagraph (C), and in such manner and at
such times (but not more frequently than four
times per year), as the Secretary may specify,
with respect to each individual covered under
the plan and entitled to benefits under this
title.
``(B) Provision of information by employers
and employee organizations.--An employer (or
employee organization) that maintains or
participates in a group health plan (other than
a plan exempt, under paragraph (1)(E)(v), from
the requirements of paragraph (1)) shall
provide to the administrator of the plan any or
all of the information elements listed in
subparagraph (C), and in such manner and at
such times (but not more frequently than four
times per year), as the Secretary may specify,
with respect to each individual covered under
the plan and entitled to benefits under this
title.
``(C) Information elements to be provided.--
The information elements to be provided under
subparagraph (A) or (B) are:
``(i) Elements concerning the
individual.--
``(I) The individual's name.
``(II) The individual's date
of birth.
``(II) The individual's sex.
``(IV) The individual's
social security insurance
number.
``(V) The number assigned by
the Secretary to the individual
for claims under this title.
``(VI) The family
relationship of the individual
to the person who has current
or former employment status
with the employer.
``(ii) Elements concerning the family
member with current or former
employment status.--
``(I) The name of the person
in the individual's family who
has current or former
employment status with the
employer.
``(II) That person's social
security insurance number.
``(III) The number or other
identifier assigned by the plan
to that person.
``(IV) The periods of
coverage for that person under
the plan.
``(V) The employment status
of that person (current or
former) during those periods of
coverage.
``(VI) The classes (of that
person's family members)
covered under the plan.
``(iii) Plan elements.--
``(I) The nature of the items
and services covered under the
plan.
``(II) The name and address
to which claims under the plan
are to be sent.
``(iv) Elements concerning the
employer.--
(I) The employer's name.
``(II) The employer's
address.
``(III) The employer
identification number of the
employer.
``(D) Use of identifiers.--The administrator
of a group health plan shall utilize an
identifier for the plan (that the Secretary may
furnish) in providing information under
subparagraph (A) and in other transactions, as
may be specified by the Secretary, related to
the provisions of this subsection.
``(E) Penalty for noncompliance.--Any entity
that knowingly and willfully fails to comply
with a requirement imposed by the previous
subparagraphs shall be subject to a civil money
penalty not to exceed $1000 for each incident
of such failure. The provisions of section
1128A (other than subsections (a) and (b))
shall apply to a civil money penalty under the
previous sentence in the same manner as those
provisions apply to a penalty or proceeding
under section 1128A(a).''.
(b) Effective Date.--The amendment made by subsection (a)
is effective 180 days after the date of enactment of this Act.
SEC. 11447. TECHNICAL CHANGES CONCERNING MINIMUM SIZES OF GROUP HEALTH
PLANS.
(a) Consolidation of Requirements.--
(1) Section 1862(b)(1)(A) (42 U.S.C. 1395y(b)(1)(A))
(as amended by section 11443 of this Act) is further
amended--
(A) by striking clauses (ii) and (iii), and
(B) by renumbering clause (iv) as (ii).
(2) Section 1862(b)(1)(B) (42 U.S.C. 1395y(b)(1)(B))
is amended--
(A) in clause (i), by striking ``large group
health plan (as defined in clause (iv))'' and
inserting ``group health plan'', and
(B) by striking clause (iv).
(3) Section 1862(b)(1)(E) (42 U.S.C. 1395y(b)(1)(E))
(as amended by section 405(c)(3) of this Act) is
further amended by adding at the end the following:
``(v) Exclusion of group health plans of
small and medium employers.--
``(I) Subparagraph (A) shall not
apply to a group health plan unless the
plan covers employees of at least one
employer that has 20 or more employees
on at least 50 percent of its business
days in each of 20 or more calendar
weeks in the current or preceding
calendar year.
``(II) Subparagraph (B) shall not
apply to a group health plan unless the
plan covers employees of at least one
employer that has 100 or more employees
on at least 50 percent of its business
days in each of 20 or more calendar
weeks in the current or preceding
calendar year.''.
(b) Conforming Amendments.--
(1) The second sentence of section 1862(b)(2)(A) (42
U.S.C. 1395y(b)(2)(A)) is amended by striking ``or
large group health plan''.
(2) Section 1862 (b)(3)(C) (42 U.S.C. 1395y(b)(3)(C))
is amended--
(A) in the heading, by striking ``or a large
group health plan'', and
(B) in the first sentence, by striking ``or a
large group health plan''.
(3)(A) Subparagraph (A) of the first sentence of
section 1837(i)(1) (42 U.S.C. 1395p(i)(1)) is amended
by striking ``(or the individual's spouse's) current
employment status'' and inserting ``current employment
status (or the current employment status of a family
member of the individual).''.
(B) Section 1837(i)(1) (42 U.S.C. 1395p(i)(1)) is
amended by striking the second sentence.
(4)(A) Subparagraph (b) of the first sentence of
section 1837(i)(2) (42 U.S.C. 1395p(i)(2)) is amended
by striking ``(or the individual's spouse's) current
employment status'' and inserting ``current employment
status (or the current employment status of a family
member of the individual).''.
(B) Section 1837(i)(2) (42 U.S.C. 1395p(i)(2)) is
amended by striking the second sentence.
(5) Section 1837(i)(3) (42 U.S.C. 1395p(i)(3)) is
amended--
(A) by striking subparagraph (b), and
(B) by striking ``(3)(A)'' and inserting
``(3)''.
(6) Clause (2) of the second sentence of section
1839(b) (42 U.S.C. 1395r(b)) is amended by striking
``by reason of the individual's (or the individual's
spouse's) current employment status or months during
which the individual has not attained the age of 65 and
for which the individual can demonstrate that the
individual was enrolled in a large group health plan''.
Subpart B--Contractor Reform
SEC. 11451. INCREASED FLEXIBILITY IN CONTRACTING FOR MEDICARE CLAIMS
PROCESSING.
(a) Carriers to Include Entities That are Not Insurance
Companies.--
(1) The matter in section 1842(a) (42 U.S.C.
1395u(a)) preceding paragraph (1) is amended by
striking ``with carriers'' and inserting ``with
agencies and organizations (referred to as carriers)''.
(2) Section 1842(f) (42 U.S.C. 1394u(f)) is repealed.
(b) Choice of Fiscal Intermediaries by Providers of
Services; Secretarial Flexibility in Assigning Functions to
Intermediaries and Carriers.--
(1) Section 1816 (42 U.S.C. 1395h) is amended by
striking everything after the heading but before
subsection (b) and inserting the following:
``Sec. 1816. (a)(1) The Secretary may enter into contracts
with agencies or organizations to reform any or all of the
following functions, or parts of those functions (or, to the
extent provided in a contract, to secure performance thereof by
other organizations):
``(A) determine (subject to the provisions of section
1878 and to such review by the Secretary as may be
provided for the contracts) the amount of the payments
required pursuant to this part to be made to providers
of services,
``(B) make payments described in subparagraph (A),
``(C) provide consultative services to institutions
or agencies to enable them to establish and maintain
fiscal records necessary for purposes of this part and
otherwise to qualify as providers of services,
``(D) serve as a center for, and communicate to
individuals entitles to benefits under this part and to
providers of services, any information or instructions
furnished to the agency or organization by the
Secretary, and serve as a channel of communication from
individuals entitled to benefits under this part and
from providers of services to the Secretary,
``(E) make such audits of the records of providers of
services as may be necessary to insure that proper
payments are made under this part,
``(F) perform the functions described by subsection
(d), and
``(G) perform such other functions as are necessary
to carry out the purposes of this part.
``(2) As used in this title and title XI, the term `fiscal
intermediary' means an agency or organization with a contract
under this section.''.
(2) Subsections (d) and (e) of section 1816 (42
U.S.C. 1395h) are amended to read as follows:
``(d) Each provider of services shall have a fiscal
intermediary that--
``(1) acts as a single point of contact for the
provider of services under this part,
``(2) makes its services sufficiently available to
meet the needs of the provider of services, and
``(3) is responsible and accountable for arranging
the resolution of issues raised under this part by the
provider of services.
``(e)(1)(A) The Secretary shall, at least every five years,
permit each provider of services (other than a home health
agency or a hospice program) to choose an agency or
organization (from at least three proposed by the Secretary, of
which at least one shall have an office in the geographic area
of the provider of services, except as provided by subparagraph
(B)(ii)(II)) as the fiscal intermediary under subsection (d)
for the provider of services. If a contract with that fiscal
intermediary is discontinued, the Secretary shall permit the
provider of services to choose under the same conditions from
three other agencies or organizations
``(B)(i) The Secretary, in carrying out subparagraph (A),
shall permit a group of hospitals (or a group of another class
of providers other than home health agencies or hospice
programs) under common ownership by, or control of, a
particular entity to choose one agency or organization (from at
least three proposed by the Secretary) as the fiscal
intermediary under subsection (d) for all the providers in that
group if the conditions specified in clause (ii) are met
``(ii) the conditions for clause (i) to apply are that--
``(I) the group includes all the providers or
services of that class that are under common ownership
by, or control of, that particular entity, and
``(II) all the providers of services in that group
agree that none of the agencies or organizations
proposed by the Secretary is required to have an office
in any particular geographic area.
``(2) The Secretary, in evaluating the performance of a
fiscal intermediary, shall solicit comments from providers of
services.''.
(3)(A) Section 1816(b)(1)(A) (42 U.S.C.
1395h(b)(1)(A)) is amended by striking ``after applying
the standards, criteria, and procedures'' and inserting
``after evaluating the ability of the agency or
organization to fulfill the contract performance
requirements''.
(B) The first sentence of section 1816(f)(1) (42
U.S.C. 1395h(f)(1)) is amended--
(i) by striking ``develop standards,
criteria, and procedures'' and inserting ``,
after public notice and opportunity for
comment, develop contract performance
requirements'', and
(ii) by striking ``, and the Secretary shall
establish standards and criteria with respect
to the efficient and effective administration
of this part''.
(C) The second sentence of section 1842(b)(2)(A) (42
U.S.C. 1395u(b)(2)(A)) is amended to read as follows:
``The Secretary shall, after public notice and
opportunity for comment, develop contract performance
requirements for the efficient and effective
performance of contract obligations under this
section.''.
(D) Section 1842(b)(2)(A) (42 U.S.C. 1395u(b)(2)(A))
is amended by striking the third sentence.
(E) The matter in section 1842(b)(2)(B) (42 U.S.C.
1395u(b)(2)(B)) preceding clause (i) is amended by
striking ``establish standards'' and inserting
``develop contract performance requirements''.
(F) Section 1842(b)(2)(D) (42 U.S.C. 1395u(b)(2)(D))
is amended by striking ``standards and criteria'' each
place it occurs and inserting ``contract performance
requirements''.
(4)(A) The matter in section 1816(b) (42 U.S.C.
1395h(b)) preceding paragraph (1) is amended by
striking ``an agreement'' and inserting ``a contract''.
(B) Paragraphs (1)(B) and (2)(A) of section 1816(b)
(42 U.S.C. 1395h(b)) are each amended by striking
``agreement'' and inserting ``contract''.
(C) The first sentence of section 1816(c)(1) (42
U.S.C. 1395h(c)(1)) is amended by striking ``An
agreement'' and inserting ``A contract''.
(D) The last sentence of section 1816(c)(1) (42
U.S.C. 1395h(c)(1)) is amended by striking ``an
agreement'' and inserting ``a contract''.
(E) The matter in section 1816(c)(2)(A) (42 U.S.C.
1395h(c)(2)(A)) preceding clause (i) is amended by
striking ``agreement'' and inserting ``contract''.
(F) Section 1816(c)(3)(A) (42 U.S.C. 1395h(c)(3)(A))
is amended by striking ``agreement'' and inserting
``contract''.
(G) The first sentence of section 1816(f)(1) (42
U.S.C. 1395h(f)(1)) is amended by striking ``an
agreement'' and inserting ``a contract''.
(H) Section 1816(h) (42 U.S.C. 1395h(h)) is amended--
(i) by striking ``An agreement'' and
inserting ``A contract'', and
(ii) by striking ``the agreement'' each place
it occurs and inserting ``the contract''.
(I) Section 1816(i)(1) (42 U.S.C. 1395h(i)(1)) is
amended by striking ``an agreement'' and inserting ``a
contract''.
(J) Section 1816(j) (42 U.S.C. 1395(j)) is amended by
striking ``An agreement'' and inserting ``A contract''.
(K) Section 1816(k) (42 U.S.C. 1395h(k)) is amended
by striking ``An agreement'' and inserting ``A
contract''.
(L) The matter in section 1842(a) (42 U.S.C.
1395u(a)) preceding paragraph (1) is amended by
striking ``agreements'' and inserting ``contracts''.
(M) Section 1842(h)(3)(A) (42 U.S.C. 1395u(h)(3)(A))
is amended by striking ``an agreement'' and inserting
``a contract''.
(5) Section 1816(f)(1) (42 U.S.C. 1395h(f)(1)) is
amended by striking the second sentence.
(6)(A) The matter in section 1816(c)(2)(A) (42 U.S.C.
1395h(c)(2)(A)) preceding clause (i) is amended by
inserting ``that provides for making payments under
this part'' after ``this section''.
(B) Section 1816(c)(3)(A) (42 U.S.C. 1395h(c)(3)(A))
is amended by inserting ``that provides for making
payments under this part'' after ``this section''.
(C) Section 1816(k) (42 U.S.C. 1395h(k)) is amended
by inserting ``(as appropriate)'' after ``submit''.
(D) The matter in section 1842(a) (42 U.S.C.
1395u(a)) preceding paragraph (1) is amended by
striking ``some or all of the following functions'' and
inserting ``any or all of the following functions, or
parts of those functions''.
(E) The first sentence of section 1842(b)(2)(C) (42
U.S.C. 1395u(b)(2)(C)) is amended by inserting ``(as
appropriate)'' after ``carriers''.
(F) The matter preceding subparagraph (A) in the
first sentence of section 1842(b)(3) (42 U.S.C.
1395u(b)(3)) is amended by inserting ``(as
appropriate)'' after ``contract''.
(G) The matter in section 1842(b)(7)(A) (42 U.S.C.
1395u(b)(7)(A)) preceding clause (i) is amended by
striking ``the carrier'' and inserting ``a carrier''.
(H) The matter in section 1842(b)(11)(A) (42 U.S.C.
1395u(b)(11)(A)) preceding clause (i) is amended by
inserting ``(as appropriate)'' after ``each carrier''.
(I) The first sentence of section 1842(h)(2) (42
U.S.C. 1395u(b)(2)) is amended by inserting ``(as
appropriate)'' after ``shall''.
(J) Section 1842(h)(5)(A) (42 U.S.C. 1395u(h)(5)(A)
is amended by inserting ``(as appropriate)'' after
``carrier''.
(7)(A) Section 1816(c)(2)(C) (42 U.S.C.
1395h(c)(2)(C) is amended by striking ``hospital, rural
primary care hospital, skilled nursing facility, home
health agency hospice program, comprehensive outpatient
rehabilitation facility, or rehabilitation agency'' and
inserting ``* * * of services''.
(B) The matter in section 1816(j) (42 U.S.C. 1395(j))
preceding paragraph (1) is amended by striking ``for
home health services, extended care services, or post-
hospital extended care services''.
(8) Section 1842(a)(3) (42 U.S.C. 1395u(a)(3)) is
amended by inserting ``(to and from individuals enroll
under this part and to and from physicians and other
entities that furnish items and services)'' after
``communication''.
(c) Elimination of Special Provisions for Terminations of
Contracts.--
(1) The matter in section 1816(b) (42 U.S.C.
1395h(b)) preceding paragraph (1) is amended by
striking ``or renew''.
(2) The last sentence of section 1816(c)(1) (42
U.S.C. 1395h(c)(1)) is amended by striking ``or
renewing''.
(3) Section 1816(f)(1) (42 U.S.C. 1395h(f)(1)) is
amended by striking ``, renew, or terminate'' and ``,
whether the Secretary should assign or reassign a
provider of services to an agency or organization,''.
(4) Section 1816(g) (42 U.S.C. 1395h(g)) is repealed.
(5) The last sentence of section 1842(b)(2)(A) (42
U.S.C. 1395u(b)(2)(A)) is amended by striking ``or
renewing''.
(6) Section 1842(b) (42 U.S.C. 1395u(b)) is amended
by striking paragraph (5).
(d) Repeal of Fiscal Intermediary Requirements That Are Not
Cost-Effective.--Section 1816(f)(2) (42 U.S.C. 1395h(f)(2)) is
amended to read as follows:
``(2) The contract performance requirements developed under
paragraph (1) shall include, with respect to claims for
services furnished under this part by any provider of services
other than a hospital, whether such agency or organization is
able to process 75 percent of reconsiderations within 60 days
and 90 percent of reconsiderations within 90 days.''.
(e) Repeal of Cost Reimbursement Requirements.--
(1) The first sentence of section 1816(c)(1) (42
U.S.C. 1395h(c)(1)) is amended--
(A) by striking the comma after
``appropriate'' and inserting ``and'', and
(B) by striking everything after ``subsection
(a)'' up to the period.
(2) Section 1816(c)(1) (42 U.S.C. 1395h(c)(1)) is
further amended by striking the second and third
sentences.
(3) The first sentence of section 1842(c)(1)(A) (42
U.S.C. 1395u(c)(1)(A)) is amended--
(A) by striking ``shall provide'' the first
place it occurs and inserting ``may provide'',
and
(B) by striking everything after ``this
part'' up to the period.
(4) Section 1842(c)(1) (42 U.S.C. 1395u(c)(1)) is
further amended by striking the remaining sentences.
(5) Section 2326(a) of the Deficit Reduction Act of
1984 (42 U.S.C. 1395h nt) is repealed.
(f) Competition Required for New Contracts and In Cases of
Poor Performance.--
(1) Section 1816(c) (42 U.S.C. 1395h(c)) is amended
by adding at the end the following:
``(4)(A) A contract with a fiscal intermediary under this
section may be renewed from term to term without regard to any
provision of law requiring competition if the fiscal
intermediary has met or exceeded the performance requirements
established in the current contract.
``(B) Functions may be transferred among fiscal
intermediaries without regard to any provision of law requiring
competition.''.
(2) Section 1842(b) (42 U.S.C. 1395u(b)) is amended
by striking everything before paragraph (2) and
inserting the following:
``(b)(1)(A) A contract with a carrier under subsection (a)
may be renewed from term to term without regard to any
provision of law requiring competition if the carrier has met
or exceeded the performance requirements established in the
current contract.
``(B) Functions may be transferred among carriers without
regard to any provision of law requiring competition.''.
(g) Waiver of Competitive Requirements for Initial
Contracts.--
(1) Contracts whose periods begin during the one year
period that begins on the first day of the fourth
calendar month that begins after the date of enactment
of this Act may be entered into under section 1816(a)
of the Social Security Act (42 U.S.C. 1395h(a)) without
regard to any provision of law requiring competition.
(2) The amendments made by subsection (f) apply to
contracts whose periods begin after the end of the one
year period specified in paragraph (1) of this
subsection.
(h) Effective Dates.--
(1) The amendments made by subsection (c) apply to
contracts whose periods end at, or after, the end of
the third calendar month that begins after the date of
enactment of this Act.
(2) The amendments made by subsections (a), (b), (d),
and (e) apply to contracts whose periods begin after
the third calendar month that begins after the date of
enactment of this Act.
Subpart C--Provisions Relating to Part B of Medicare
SEC. 11461. REPLACEMENT OF REASONABLE CHARGE METHODOLOGY BY FEE
SCHEDULES.
(a) In General.--The matter in section 1833(a)(1) (42
U.S.C. 13951(a)(1)) preceding clause (A) is amended by striking
``the reasonable charges for the services'' and inserting ``the
lesser of the actual charges for the services and the amounts
determined by the applicable fee schedules developed by the
Secretary for the particular services''.
(b) Conforming Amendments.--
(1) Section 1833(a)(1) (42 U.S.C. 1395l(a)(1)) is
amended--
(A) in clause (A), by striking ``reasonable
charges for'' and inserting ``payment bases
otherwise applicable to'',
(B) in clause (B), by striking ``reasonable
charges'' and inserting ``fee schedule
amounts'', and
(C) by inserting after clause (F) the
following: ``(G) with respect to services
described in clause (i), (ii), or (iv) of
section 1861(s)(2)(K) (relating to physician
assistants and nurse practitioners), the
amounts paid shall be 80 percent of the lesser
of the actual charge for the services and the
applicable amount determined under subclause
(I) of (II) of section 1842(b)(12)(A)(ii),''.
(2) Section 1833(a)(2) (42 U.S.C. 1395l(a)(2)) is
amended--
(A) in the matter in subparagraph (B)
preceding clause (i), by striking ``(C), (D),''
and inserting ``(D),'' and
(B) by striking subparagraph (C).
(3) Section 1833(l) (42 U.S.C. 1395l(l)) is amended--
(A) in paragraph (3)--
(i) by striking subparagraph (B), and
(ii) by striking ``(3)(A)'' and
inserting ``(3)'', and
(B) by striking paragraph (6).
(4) The heading to section 1834(g)(1)(A)(ii) (42
U.S.C. 1395m(g)(1)(A)(ii)) is amended by striking
``Reasonable charges for professional'' and inserting
``Professional''.
(5) Section 1842(a) (42 U.S.C. 1395u(a)) is amended--
(A) in the matter preceding paragraph (1), by
striking ``reasonable charge'' and inserting
``fee schedule'', and
(B) in paragraph (1)(A), by striking
``reasonable charge'' and inserting ``other''.
(6)(A) The matter preceding clause (i) in
subparagraph (B) of the first sentence of section
1842(b)(3) (42 U.S.C. 1395u(b)(3)) is amended by
striking everything after ``assure that,'' and
inserting the following: ``where payment under this
part for a service is on a basis other than a cost
basis, such payment will (except as otherwise provided
in section 1870(f)) be made--''.
(B) Subparagraph (B)(ii)(I) of the first sentence of
section 1842(b)(3) (42 U.S.C. 1395u(b)(3)) is amended
to read as follows: ``(I) the amount determined by the
applicable payment basis under this part is the full
charge for the service,''.
(C) Section 1842(b)(3) (42 U.S.C. 1395u(b)(3)) is
amended by striking the second, third, fourth, fifth,
sixth, eight, and ninth sentences.
(7)(A) Section 1842(b)(4) (42 U.S.C. 1395u(b)(4)) is
amended to read as follows:
``(4) In the case of an enteral or parenteral pump
that is furnished on a rental basis during a period of
medical need--
``(A) monthly rental payments shall not be
made under this part for more than 15 months
during that period, and
``(B) after monthly rental payments have been
made for 15 months during that period, payment
under this part shall be made for maintenance
and servicing of the pump is such amounts as
the Secretary determines to be reasonable and
necessary to ensure the proper operation of the
pump.''.
(B) Section 6112(b) (42 U.S.C. 1395m nt) of the
Omnibus Reconciliation Act of 1989 is repealed.
(8) Section 1842(b)(7) (42 U.S.C. 1395u(b)(7)) is
amended--
(A) in the matter in subparagraph (D)(i)
preceding subclause (I), by striking ``, to the
extent that such payment is otherwise allowed
under this paragraph,'',
(B) in subparagraph (D)(ii), by striking
``subparagraph'' and inserting ``paragraph'',
(C) by striking ``(7)(A) In the case of''
through the end of subparagraph (C).
(D) by striking ``(D)(i)'' and inserting
``(7)(A)'',
(E) by redesignating clauses (ii) and (iii)
as subparagraphs (B) and (C), respectively, and
(F) by redesignating subclauses (I), (II),
and (III), of subparagraph (A) (as redesignated
by subparagraph (D) of this paragraph) as
clauses (i), (ii), and (iii), respectively.
(9)(A) Section 1842(b) (42 U.S.C. 1395u(b)) is
amended by striking paragraphs (8) and (9).
(B) The first sentence of section 1834(a)(10)(B) (42
U.S.C. 1395m(a)(10(B)) is amended by striking
everything after ``is authorized to'' up to the period
and inserting the following: ``describe by regulation
the factors to be used in determining the cases (of
particular items) in which the application of this
subsection results in the determination of an amount
that, by reason of its being grossly excessive or
grossly deficient, is not inherently reasonable, and to
provide in those cases for the factors that will be
considered in establishing an amount that is realistic
and equitable''.
(10) Section 1842(b)(10) (42 U.S.C. 1395u(b)(10)) is
repealed.
(11) Section 1842(b)(11) (42 U.S.C. 1395u(b)(11)) is
amended--
(A) by striking subparagraphs (B) through
(D),
(B) by striking ``(11)(A)'' and inserting
``(11)'', and
(C) by redesignating clauses (i) and (ii) as
subparagraphs (A) and (B), respectively.
(12) Section 1842(b)(12)(A)(ii) (42 U.S.C.
1395u(b)(12)(A)(ii) is amended--
(A) in the matter preceding subclause (I), by
striking ``prevailing charges determined under
paragraph (3)'' and inserting ``the amounts
determined under section 1833(a)(1)(G)'', and
(B) in subclause (II), by striking
``prevailing charge rate'' and all that follows
up to the period and inserting ``fee schedule
amount specified in section 1848 for such
services performed by physicians''.
(13) Paragraphs (14) through (17) of section 1842(b)
(42 U.S.C. 1395u(b)) are repealed.
(14)(A) Section 1842(b)(18)(A) (42 U.S.C.
1395u(b)(18)(A)) is amended by striking ``reasonable
charge or''.
(B) Paragraph (18) of section 1842(b) (42 U.S.C.
1395u(b)) is renumbered as paragraph (14).
(15)(A) The matter in section 1842(j) (42 U.S.C.
1395u(j)) preceding paragraph (2) is amended to read as
follows:
``(j)(1) See subsections (k), (l), (m), (n), and (p) as to
the cases in which sanctions may be applied under paragraph
(2).''.
(B) Section 1842(j)(4) (42 U.S.C. 1395u(j)(4)) is
amended by striking ``under paragraph (1)''.
(16) Section 1842(n)(1)(A) (42 U.S.C. 1395u(n)(1)(A))
is amended by striking ``reasonable charge (or other
applicable limit)'' and inserting ``other applicable
limit''.
(17) Section 1842(q) 42 U.S.C. 1395u(q) is amended--
(A) by striking paragraph (1)(B), and
(B) by striking ``(q)(1)(A)'' and inserting
``(q)(1)''.
(18) Section 1845(b)(1) (42 U.S.C. 1395w-1(b)(1) is
amended by striking ``adjustments to the reasonable
charge levels for physicians' services recognized under
section 1842(b) and''.
(19) Section 1848(i)(3) (42 U.S.C. 1395w-4(i)(3)) is
repealed.
(20) Clause (ii) of the first sentence of section
1866(a)2)(A) (42 U.S.C. 1395cc(a)(2)(A) is amended by
striking ``reasonable charges'' through ``provider)''
and inserting ``amount customarily charged for such
items and services by such provider''.
(21) Section 1881(b)(3)(A) (42 U.S.C.
1395rr(b)(3)(A)) is amended by striking ``a reasonable
charge'' through ``section 1848)'' and inserting ``the
basis described in section 1848''.
(22) Section 9340 of the Omnibus Budget
Reconciliation Act of 1986 (42 U.S.C. 1395u nt) is
repealed.
(c) Effective Dates.--The amendments made by the preceding
subsections, to the extent they substitute fee schedules for
reasonable charges, apply to particular services as of the date
specified by the Secretary of Health and Human Services.
(d) Initial Budget Neutrality.--The Secretary, in
developing a fee schedule for particular services (under the
amendments made by subsections (a) and (b)), shall set amounts
for the first year period to which the fee schedule applies at
a level such that the total payments under title XVIII of the
Social Security Act (42 U.S.C. 1395 et seq.) for those services
for that year period shall be approximately equal to the
estimated total payments if those amendments had not been made.
SEC. 11462. APPLICATION OF INHERENT REASONABLENESS TO SURGICAL
DRESSINGS.
Section 1834(i) (42 U.S.C. 1395m(i)) is amended by adding
at the end the following:
``(3) Adjustment for inherent reasonableness.--The
provisions of subsection (a)(10)(B) shall also apply to
surgical dressings.''.
SEC. 11463. APPLICATION OF COMPETITIVE ACQUISITION PROCESS TO CERTAIN
PART B ITEMS AND SERVICES.
(a) General Rule.--Part B of title XVIII (42 U.S.C. 1395j
et seq.) is amended by inserting after section 1846 the
following:
``COMPETITIVE ACQUISITION OF ITEMS AND SERVICES
``Sec. 1847. (a) Establishment of Bidding Areas.--
``(1) In general.--The Secretary shall establish
competitive acquisition areas for the purposes of
awarding contracts for the furnishing under this part
of the items and services described in subsection (c)
after 1995. The Secretary may establish different
competitive acquisition areas under this subsection for
different classes of items and services under this
part.
``(2) Criteria for establishment.--The competitive
acquisition areas established under paragraph (1)
shall--
``(A) initially be, or be within,
metropolitan statistical areas, and
``(B) be chosen based on the availability and
accessibility of entities able to furnish items
and services, and the probable savings to be
realized by the use of competitive bidding in
the furnishing of items and services in the
area.
``(b) Awarding of Contracts in Areas.--
``(1) In general.--The Secretary shall conduct a
competition among individuals and entities supplying
items and services under this part for each competitive
acquisition area established under subsection (a) for
each class of items and services.
``(2) Conditions for awarding contract.--The
Secretary may not award a contract to any entity under
the competition conducted pursuant to paragraph (1) to
furnish an item or service under this part unless the
Secretary finds that the entity meets quality standards
specified by the Secretary for the furnishing of the
item or service.
``(3) Contents of contract.--A contract entered into
with an entity under the competition conducted pursuant
to paragraph (1) shall specify (for all of the items
and services within a class)--
``(A) the quantity of items and services the
entity shall provide; and
``(B) such other terms and conditions as the
Secretary may require.
``(c) Services Described.--The items and services to which
the provisions of this section shall apply are as follows:
``(1) Magnetic resonance imaging tests and
computerized axial tomography scans, including
physician's interpretation of the results of such tests
and scans.
``(2) Enteral and parenteral nutrients, supplies, and
equipment.
``(3) Such other items as the Secretary may
specify.''.
(b) Items and Services To Be Furnished Only Through
Competitive Acquisition.--Section 1862(a) (42 U.S.C. 1395y(a))
is amended--
(1) by striking ``or'' at the end of paragraph (14),
(2) by striking the period at the end of paragraph
(15) and inserting ``; or'', and
(3) by inserting after paragraph (15) the following:
``(16) where such expenses are for an item or service
furnished in a competitive acquisition area (as
established by the Secretary under section 1847(a)) by
an entity other than an entity with which the Secretary
has entered into a contract under section 1847(b) for
the furnishing of such an item or service in that area,
unless the Secretary finds that such expenses were
incurred in a case of urgent need.''.
(c) Reduction in Payment Amounts if Competitive Acquisition
Fails To Achieve Minimum Reduction in Payments.--
Notwithstanding any provision of title XVIII of the Social
Security Act (42 U.S.C. 1395 et seq.), if the establishment of
competitive acquisition areas under section 1847 of that Act
(as added by this part) and the furnishing of items and
services under that section during 1997 does not result in a
reduction of at least 15 percent in the projected payment
amounts that would apply to a class of items or services under
part B of that title (42 U.S.C. 1395j et seq.) if that class of
items or services were not to be furnished under that section
1997, the Secretary shall reduce for that year the payment
amounts for that class of items and services by the percentage
the Secretary determines necessary to result in that reduction
for that year (and those reduced amounts shall be considered
the full payment amounts for that year in calculating payment
amounts for future years).
(d) Effective Date.--The amendments made by subsections (a)
and (b) apply to items and services furnished under part B of
title XVIII of the Social Security Act (42 U.S.C. 1395j et
seq.) after 1995.
SEC. 11464. APPLICATION OF COMPETITIVE ACQUISITION PROCESS TO
LABORATORY SERVICES.
(a) In General.--Section 1847(c), as added by section
11463(a) of this Act, is amended by renumbering paragraph (4)
as (5) and inserting after paragraph (3) the following:
``(4) Clinical diagnostic laboratory tests.''.
(b) Reduction in Payment Amounts if Competitive Acquisition
Fails To Achieve Minimum Reduction in Payments.--See section
11463(c) for provisions that address reductions in payment
amounts.
(c) Effective Date.--The amendment made by subsection (a)
applies to tests furnished under part B of title XVIII of the
Social Security Act (42 U.S.C. 1395j et seq.) after 1995.
SEC. 11465. CHANGES IN PAYMENTS FOR CLINICAL LABORATORY TESTS.
(a) In General.--Section 1833(h)(2)(A)(iii) (42 U.S.C.
1395l(h)(2)(A)(iii)) is amended--
(1) by striking the clause designation ``(iii)'' and
inserting ``(iii)(I)'', and
(2) by adding at the end the following:
``(II) In lieu of the fees established under subclause I,
the Secretary may pay for tests classified as automated tests
on the basis of a nationally uniform fee for a group of tests
(of whatever number) performed together.
``(III) The Secretary shall pay for tests for amylase,
apolipoprotein A, apolipoprotein B, creatine kinase, gamma
glutamyl transferase, iron, lipase, magnesium, thyroxine,
triglyceride, or triiodothyronine uptake on the same basis as
the Secretary pays for other tests classified as automated
tests.
``(IV) The Secretary may, from time to time, reclassify
specific tests as automated or not automated, based on the
volume of a test and the relative frequency by which the test
is performed on automated equipment.''.
(b) Effective Date and Initial Payment Levels.--
(1) The amendments made by subsection (a) apply to
tests performed after 1995.
(2) If the Secretary sets a nationally uniform fee
under subclause (II) of section 1833(h)(2)(A)(iii) of
the Social Security Act (42 U.S.C. 1395(h)(2)(A)(iii)),
such a fee shall be initially established so that
estimated aggregate payments under such fee shall equal
the estimated aggregate amounts that would otherwise
have been payable for the tests under subclause (I).
Subpart D--Provisions Relating to Parts A and B of Medicare
SEC. 11471. DISCLOSURE OF TAXPAYER IDENTIFYING NUMBERS AND OTHER
INFORMATION.
(a) Providers of Services and Certain Other Entities.--
Section 1124 (42 U.S.C. 1320a-3) is amended by adding at the
end of the following:
``(c) The Secretary may also require a disclosing entity to
supply the Secretary with the taxpayer identifying number (TIN)
of the disclosing entity, of any person concerning whom
information is to be supplied under subsection (a), or of any
other disclosing entity listed under subsection (b).''.
(b) Entities That Furnish Items and Services Under Part
B.--
(1) Section 1124A(c)(1) (42 U.S.C. 1320a-3a(c)(1)) is
amended by striking ``on an assignment-related basis''.
(2) Section 1124A(a) (42 U.S.C. 1320a-3a(a)) is
amended--
(A) by striking ``and'' at the end of
paragraph (1),
(B) by striking the period at the end of
paragraph (2) and adding ''; and'', and
(C) by adding at the end the following:
``(3) on the identity of each individual described in
section 1866(a)(1)(D).''.
(3) Section 1124A (42 U.S.C. 1320a-3a) is amended--
(A) by redesignating subsection (c) as (d),
and
(B) by inserting after subsection (b) the
following:
``(d) The Secretary may also require a disclosing part B
provider to provide the Secretary with the taxpayer identifying
number (TIN) of the disclosing part B provider, of any person
concerning whom information is to be supplied under subsection
(a)(1), and of any managing employee or entity listed under
subsection (a)(2).''.
(c) Verification of TINs With the Secretary of the
Treasury.--Section 6103(m) of the Internal Revenue Code of 1986
(26 U.S.C. 6103(m)) is amended by adding at the end the
following:
``(8) Individuals and other entities involved in
furnishing health care items and services under Federal
(or federally supported) programs.--Upon written
request by the Secretary of Health and Human Services,
the Secretary shall disclose to the Secretary of Health
and Human Services the name of each person or entity
whose TIN has been obtained under section 1124(c) or
1124A(d) of the Social Security Act.''.
SEC. 11472. USE OF WAGE INDEX FOR AREA IN WHICH HOME HEALTH SERVICES
ARE FURNISHED.
(a) In General.--Section 1861(v)(1)(L)(iii) (42 U.S.C.
1395x(v)(1)(L)(iii)) is amended by striking ``the home health
agency is located'' and inserting ``services are furnished''.
(b) Effective Date.--The amendment made by subsection (a)
applies to services furnished after 1996.
Changes to Administration Bill
(1) SNF PPS (Section 11113): Advance effective date by one
year to October 1, 1997. Interim PPS contained in Section 11112
would apply between October 1, 1996 and September 30, 1997.
(2) Medical Education (Section 11105): Delete all but
subsections (a)(1) and (b)(1). The only thing that remains is
the freeze on interns and residents at the hospital-specific
level in the aggregate and for non-primary care slots, for both
Medicare IME and GME payments. Plus the 2 proposals on the
attached sheet.
(3) AAPCC Add-Ons (Section 11115): Change subsection (c)
(new section 1886(d)(11)(F)) to payback of 100 percent of IME,
GME and DSH (rather than 75 percent), effective 1/1/98. See
change in removal of add-ons in managed care section.
(4) Oxygen (Section 11126): Delete Section 11126 from
Administration bill. Substitute Section 8233 from H.R. 2530
(the Coalition bill).
(5) Rural Provisions: Keep Section 11116 (Sole Community
Hospitals) and Section 11117 (Rural Primary Care Hospital
Program). Add Section 7021 (Rural Referral Center), Section
7024 (PA/NP), Section 7025 (Telemedicine). Section 7026 (Rural
Health Outreach Grants), Section 7028 (DSH threshold) from the
Senate Democratic Plan (printed in the Congressional Record on
Nov. 1).
(6) Managed Care: See attachment.
(7) Preventive benefits demonstration program sunsets in
2001 unless the Secretary determines these benefits are cost-
effective.
Additional GMF proposals
Medical Education: Add provision from Administration
package to allow hospitals to count residents in non-hospital
settings for purposes of their IME adjustment as long as their
resident-to-bed ratio does not increase, effective 7/1/96.
Medical Education: Add provision from Administration
package to allow DGME payments to be made to certain non-
hospital settings when the non-hospital is paying for the
resident's salary in that setting, effective 7/1/96.
(c) Upgraded Durable Medical Equipment.--Section 1834(a)
(42 U.S.C. 1395m(a)) is amended by inserting after paragraph
(15) the following new paragraph:
``(16) Certain upgraded items.--
``(A) Individual's right to choose upgraded
item.--Notwithstanding any other provision of
law, effective on the date on which the
Secretary issues regulations under subparagraph
(C), an individual may purchase or rent from a
supplier an item of upgraded durable medical
equipment for which payment would be made under
this subsection if the item were a standard
item.
``(B) Payments to supplier.--In the case of
the purchase or rental of an upgraded item
under subparagraph (A)--
``(i) the supplier shall receive
payment under this subsection with
respect to such item as if such item
were a standard item; and
``(ii) the individual purchasing or
renting the item shall pay the supplier
an amount equal to the difference
between the supplier's charge and the
amount under clause (i).
In no event may the supplier's charge for an
upgraded item exceed the applicable fee
schedule amount (if any) for such item.
``(C) Consumer protection safeguards.--The
Secretary shall issue regulations providing for
consumer protection standards with respect to
the furnishing of upgraded equipment under
subparagraph (A). Such regulations shall
provide for--
``(i) determination of fair market
prices with respect to an upgraded
item;
``(ii) full disclosure of the
availability and price of standard
items and proof of receipt of such
disclosure information by the
beneficiary before the furnishing of
the upgraded item;
``(iii) conditions of participation
for suppliers in the simplified billing
arrangement;
``(iv) sanctions of suppliers who are
determined to engage in coercive or
abusive practices, including exclusion;
and
``(v) such other safeguards as the
Secretary determines are necessary.''.
OTHER MEDICARE CHANGES TO ADMINISTRATION'S ORIGINAL PLAN CHOICES
Expanded Secretarial discretion over 50/50 and minimum
enrollment: The Administration bill would establish minimum
enrollment requirements of 5,000 members in urban areas and
1,500 members in rural areas, and maintain the 50/50 enrollment
composition requirement in urban and rural areas, counting
members for whom the entity is ``substantially at risk''. The
50/50 requirement could be waived in certain situations.
This change would give the Secretary authority to contract
with organizations not meeting either the initial enrollment or
the 50/50 requirements, subject to: (1) an evaluation that the
entity has as the ability to manage risk; (2) capacity limits
imposed by the Secretary; (3) meeting appropriate financial
solvency requirements; and (4) a higher level of monitoring.
Secretarial authority to contract out with entities:
Eligible health plans would include those specified in the
Administration bill, with the addition of an ``other'' category
for new types of plans that meet specified standards. The
Secretary would retain discretion as to which plans could
contract with Medicare.
Nurses and PSO issue: The Administration bill limits who
can establish PSOs to various mixtures of physicians and/or
hospitals. This change would treat nurse practioners on a par
with physicians for purposes of creating PSOs.
BENEFITS
Barium enemas with sigmoidoscopy for high risk
beneficiaries: The Administration bill would cover colonoscopy
for beneficiaries at high risk of colon cancer. Under this
change, Medicare would cover either (1) a colonoscopy or (2) a
combination of a flexible sigmoidoscopy and an air contrast
barium enema. The original estimate for the complete colon
screening benefit was $1.1 billion; the original proposal was
repriced, based on new information, at $1.365 billion. The
total cost estimate, including this change, is $1.355 billion,
or estimated lower costs of $10 million over 7 years. (The
combination of sigmoidoscopy and air contrast barium enema cost
slightly less than colonoscopy.) Because HCFA expects a small
net savings, we do not anticipate this change would affect
CBO's estimate.
REGULATORY REFORM
CLIA compromise: The ``Blue Dog'' proposal would exempt all
physician office laboratories (POLs) from CLIA requirements,
except when they perform Pap smear tests. An identical
provision was deleted under the Byrd rule from the
Reconciliation Bill. This provision would leave a majority of
the nation's labs with no quality oversight at all. Various
compromise proposals for reducing CLIA burdens on POLs have
been discussed on Capitol Hill. One such compromise, drafted by
Democrats on the House Commerce Committee, would (1) remove the
requirement of biennial laboratory inspections, allowing as-
needed inspections based on criteria set by the Secretary; (2)
mandate that all routine inspections be announced; and (3)
reduce application requirements for CLIA certificates and
remove biennial re-application requirements. This change would
reduce burdens related to inspections and paperwork without
compromising the quality of laboratory testing.
Self-referral compensation exception: The Administration
bill includes no provision in this area; the Reconciliation
Bill would substantially weaken current protections.
This change, modeled after Mr. Stark's bill, would:
1. Add exceptions for shared facility services and for
capitated payments (if designated health services are
included).
2. Entirely exclude intraocular lens, eyeglasses, and
contact lenses from designated health services subject to
prohibitions.
3. Include DME and parenteral and enteral nutrients,
equipment and supplies in the exception for in-office ancillary
services.
4. Delineate the requirements for permissible compensation
arrangements, thus making the requirements uniform for all
arrangements.
5. Repeal the exception for physicians' services.
The ``General Exceptions to both Ownership and Compensation
Arrangement Prohibitions'' would then be: (1) shared facility
services (new); (2) in-office ancillary services (including
DME, parenteral and enteral nutrients, equipment, and supplies)
(altered); (3) pre-paid plans (unchanged); (4) capitated
payments (new); and (5) other permissible exceptions
(unchanged).
Other
OPD/PPS: Add a PPS for OPDs. In particular, in FY 2002,
establish a PPS that would be budget neutral relative to what
Medicare payments would have been in 2002 and also budget
neutral relative to what total beneficiary coinsurance would
have been in 2002.
Hospice: Under current law, hospice care is excepted from
the package of services provided by risk plans. If
beneficiaries elect hospice care, Medicare makes payments
directly to the hospice, and the HMOs and CMPs receive the full
monthly capitation amount (less an amount paid to the hospice
for attending physician services). Thus, hospices are not
required to contract directly with HMOs and CMPs. This
technical change would retain the current provision under the
new authority for Medicare managed care contracting.
SNF minimum data set: This change would require the
continuation of standardized resident assessments contained in
the minimum data set (MDS). The MDS data is necessary for
developing a case-mix adjustor for a SNF PPS, proposed
elsewhere in the bills. Current Congressional proposals
eliminate the requirement that this data be collected by
eliminating certain nursing home quality standards.
Home health agency data for case mix system: This change
would allow the Secretary to mandate the collection of data
that may be necessary to develop a case mix adjustor for HH
PPS. There is currently no requirement that such data be
collected.
Rural Primary Care Hospital Program (Sec. 11117 in
President's bill)
(1) Sen. Baucus is seeking an extension of the MAF
demonstration project until 2002, such as the one that was
included in the Conference Agreement. Since our Rural Primary
Care Hospital (RPCH) expansion proposal makes RPCHs much more
similar to MAFs in all key aspects, we suggest grandfathering
all MAFs as RPCHs as of the date of implementation of the
national program. This would effectively make all MAFs
permanent, so that extensions of the MAF demonstration would no
longer be necessary.
Centers of excellence: This change would replace the term
``rebates'' with ``beneficiary incentives.''
TITLE V--WELFARE REFORM
SEC. 9000. AMENDMENT OF THE SOCIAL SECURITY ACT.
Except as otherwise expressly provided, wherever in this
title an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a section or other provision, the
reference shall be considered to be made to a section or other
provision of the Social Security Act.
Subtitle A--Temporary Employment Assistance
SEC. 9101. STATE PLAN.
(a) In General.--Title IV (42 U.S.C. 601 et seq.) is amended
by striking part A and inserting the following:
``Part A--Temporary Employment Assistance
``SEC. 400. APPROPRIATION.
``For the purpose of providing assistance to families with
needy children and assisting parents of children in such
families to obtain and retain private sector work to the extent
possible, and public sector or volunteer work if necessary,
through the Work First Employment Block Grant program
(hereafter in this title referred to as the `Work First
program'), there is hereby authorized to be appropriated, and
is hereby appropriated, for each fiscal year a sum sufficient
to carry out the purposes of this part. The sums made available
under this section shall be used for making payments to States
which have approved State plans for temporary employment
assistance.
``Subpart 1--State Plans for Temporary Employment Assistance
``SEC. 401. ELEMENTS OF STATE PLANS.
``A State plan for temporary employment assistance shall
provide a description of the State program which carries out
the purpose described in section 400 and shall meet the
requirements of the following sections of this subpart.
``SEC. 402. FAMILY ELIGIBILITY FOR TEMPORARY EMPLOYMENT ASSISTANCE.
``(a) In General.--The State plan shall provide that any
family--
``(1) with 1 or more children (or any expectant
family, at the option of the State), defined as needy
by the State; and
``(2) which fulfills the conditions set forth in
subsection (b),
shall be eligible for cash assistance under the plan, except as
otherwise provided under this part.
``(b) Individual Responsibility Plan.--The State plan shall
provide that not later than 30 days after the approval of the
application for temporary employment assistance, a parent
qualifying for assistance shall execute an individual
responsibility plan as described in section 403. If a child
otherwise eligible for assistance under this part is residing
with a relative other than a parent, the State plan may require
the relative to execute such a plan as a condition of the
family receiving such assistance.
``(c) Limitations on Eligibility.--
``(1) Length of time.--
``(A) In general.--Except as provided in
subparagraphs (B), (C), (D), and (E), the State
plan shall provide that the family of an
individual who, after attaining age 18 years
(or age 19 years, at the option of the State),
has received assistance under the plan for 60
months, shall no longer be eligible for cash
assistance under the plan.
``(B) Hardship exception.--With respect to
any family, the State plan shall not include in
the determination of the 60-month period under
subparagraph (A) any month in which--
``(i) at the option of the State, the
family includes an individual working
20 hours per week (or more, at the
option of the State);
``(ii) the family resides in an area
with an unemployment rate exceeding 8
percent; or
``(iii) the family is experiencing
other special hardship circumstances
which make it appropriate for the State
to provide an exemption for such month,
except that the total number of
exemptions under this clause for any
month shall not exceed 15 percent of
the number of families to which the
State is providing assistance under the
plan.
``(C) Exception for teen parents.--With
respect to any family, the State plan shall not
include in the determination of the 60-month
period under subparagraph (A) any month in
which the parent--
``(i) is under age 18 (or age 19, at
the option of the State); and
``(ii) is making satisfactory
progress while attending high school or
an alternative technical preparation
school.
``(D) Exception for individuals exempt from
work requirements.--With respect to any family,
the State plan shall not include in the
determination of the 60-month period under
subparagraph (A) any month in which 1 or each
of the parents--
``(i) is seriously ill,
incapacitated, or of advanced age;
``(ii)(I) except for a child
described in subclause (II), is
responsible for a child under age 1
year (or age 6 months, at the option of
the State), or
``(II) in the case of a second or
subsequent child born during such
period, is responsible for a child
under age 3 months;
``(iii) is pregnant in the third
trimester; or
``(iv) is caring for a family member
who is ill or incapacitated.
``(E) Exception for child-only cases.--With
respect to any child who has not attained age
18 (or age 19, at the option of the State) and
who is eligible for assistance under this part,
but not as a member of a family otherwise
eligible for assistance under this part
(determined without regard to this paragraph),
the State plan shall not include in the
determination of the 60-month period under
subparagraph (A) any month in which such child
has not attained such age.
``(F) Other program eligibility.--The State
plan shall provide that if a family is no
longer eligible for cash assistance under the
plan due to the imposition of the 60-month
period under subparagraph (A) or due to the
imposition of a penalty under subparagraph
(A)(ii) or (B)(ii) of section 403(e)(1)--
``(i) for purposes of determining
eligibility for any other Federal or
federally assisted program based on
need, such family shall continue to be
considered eligible for such cash
assistance;
``(ii) for purposes of determining
the amount of assistance under any
other Federal or federally assisted
program based on need, such family
shall continue to be considered
receiving such cash assistance; and
``(iii) the State may, at the option
of the State, after having assessed the
needs of the child or children of the
family, provide for such needs with a
voucher for such family--
``(I) determined on the same
basis as the State would
provide assistance under the
State plan to such a family
with 1 less individual,
``(II) designed appropriately
to pay third parties for
shelter, goods, and services
received by the child or
children, and
``(III) payable directly to
such third parties.
``(2) Treatment of interstate migrants.--The State
plan may apply to a category of families the rules for
such category under a plan of another State approved
under this part, if a family in such category has moved
to the State from the other State and has resided in
the State for less than 12 months.
``(3) Individuals on old-age assistance or ssi
ineligible for temporary employment assistance.--The
State plan shall provide that no assistance shall be
furnished any individual under the plan with respect to
any period with respect to which such individual is
receiving old-age assistance under the State plan
approved under section 102 of title I or supplemental
security income under title XVI.
``(4) Children for whom federal, state, or local
foster care maintenance or adoption assistance payments
are made.--A child with respect to whom foster care
maintenance payments or adoption assistance payments
are made under part E or under State or local law shall
not, for the period for which such payments are made,
be regarded as a needy child under this part, and such
child's income and resources shall be disregarded in
determining the eligibility of the family of such child
for temporary employment assistance.
``(5) Denial of assistance for 10 years to a person
found to have fraudulently misrepresented residence in
order to obtain assistance in 2 or more states.--The
State plan shall provide that no assistance will be
furnished any individual under the plan during the 10-
year period that begins on the date the individual is
convicted in Federal or State court of having made, a
fraudulent statement or representation with respect to
the place of residence of the individual in order to
receive benefits or services simultaneously from 2 or
more States under programs that are funded under this
part, title XIX, or the Food Stamp Act of 1977, or
benefits in 2 or more States under the supplemental
security income program under title XVI.
``(6) Denial of assistance for fugitive felons and
probation and parole violators.--
``(A) In general.--The State plan shall
provide that no assistance will be furnished
any individual under the plan for any period if
during such period the State agency has
knowledge that such individual is--
``(i) fleeing to avoid prosecution,
or custody or confinement after
conviction, under the laws of the place
from which the individual flees, for a
crime, or an attempt to commit a crime,
which is a felony under the laws of the
place from which the individual flees,
or which, in the case of the State of
New Jersey, is a high misdemeanor under
the laws of such State; or
``(ii) violating a condition of
probation or parole imposed under
Federal or State law.
``(B) Exchange of information with law
enforcement agencies.--Notwithstanding any
other provision of law, the State plan shall
provide that the State shall furnish any
Federal, State, or local law enforcement
officer, upon the request of the officer, with
the current address of any recipient of
assistance under the plan, if the officer
furnishes the agency with the name of the
recipient and notifies the agency that--
``(i) such recipient--
``(I) is described in clause
(i) or (ii) of subparagraph
(A); or
``(II) has information that
is necessary for the officer to
conduct the officer's official
duties; and
``(ii) the location or apprehension
of the recipient is within such
officer's official duties.
``(d) Determination of Eligibility.--
``(1) Determination of need.--The State plan shall
provide that the State agency take into consideration
any income and resources of any individual the State
determines should be considered in determining the need
of the child or relative claiming temporary employment
assistance, subject to section 407.
``(2) Resource and income determination.--In
determining the total resources and income of the
family of any needy child, the State plan shall provide
the following:
``(A) Resources.--The State's resource limit,
including a description of the policy
determined by the State regarding any exclusion
allowed for vehicles owned by family members,
resources set aside for future needs of a
child, individual development accounts, or
other policies established by the State to
encourage savings.
``(B) Family income.--The extent to which
earned or unearned income is disregarded in
determining eligibility for, and amount of,
assistance.
``(C) Child support.--The State's policy, if
any, for determining the extent to which child
support received in excess of $50 per month on
behalf of a member of the family is disregarded
in determining eligibility for, and the amount
of, assistance.
``(D) Child's earnings.--The treatment of
earnings of a child living in the home.
``(E) Earned income tax credit.--The State
agency shall disregard any refund of Federal
income taxes made to a family receiving
temporary employment assistance by reason of
section 32 of the Internal Revenue Code of 1986
(relating to earned income tax credit) and any
payment made to such a family by an employer
under section 3507 of such Code (relating to
advance payment of earned income credit).
``(3) Verification system.--The State plan shall
provide that information is requested and exchanged for
purposes of income and eligibility verification in
accordance with a State system which meets the
requirements of section 1137.
``SEC. 403. INDIVIDUAL RESPONSIBILITY PLAN.
``(a) Assessment.--The State agency responsible for
administering the State plan shall make an initial assessment
of the skills, prior work experience, and employability of each
applicant for, or recipient of, assistance under the State plan
who--
``(1) has attained 18 years of age; or
``(2) has not completed high school or obtained a
certificate of high school equivalency, and is not
attending secondary school.
``(b) Individual Responsibility Plans.--
``(1) In general.--On the basis of the assessment
made under subsection (a) with respect to an
individual, the State agency, in consultation with the
individual, shall develop an individual responsibility
plan for the individual, which--
``(A) shall provide that participation by the
individual in job search activities shall be a
condition of eligibility for assistance under
the State plan approved under part A, except
during any period for which the individual is
employed full-time in an unsubsidized job in
the private sector;
``(B) sets forth an employment goal for the
individual and a plan for moving the individual
immediately into private sector employment;
``(C) sets forth the obligations of the
individual, which may include a requirement
that the individual attend school, maintain
certain grades and attendance, keep school age
children of the individual in school, immunize
children, attend parenting and money management
classes, or do other things that will help the
individual become and remain employed in the
private sector;
``(D) may require that the individual enter
the State program established under part F, if
the caseworker determines that the individual
will need education, training, job placement
assistance, wage enhancement, or other services
to become employed in the private sector;
``(E) shall provide that the individual
must--
``(i) assign to the State any rights
to support from any other person the
individual may have in such
individual's own behalf or in behalf of
any other family member for whom the
individual is applying for or receiving
assistance; and
``(ii) cooperate with the State--
``(I) in establishing the
paternity of a child born out
of wedlock with respect to whom
assistance is claimed, and
``(II) in obtaining support
payments for the individual and
for a child with respect to
whom such assistance is
claimed, or in obtaining any
other payments or property due
the individual or the child,
unless (in either case) the individual is found
to have good cause for refusing to cooperate as
determined by the State agency in accordance
with standards prescribed by the Secretary,
which standards shall take into consideration
the best interests of the child on whose behalf
assistance is claimed.
``(F) to the greatest extent possible shall
be designed to move the individual into
whatever private sector employment the
individual is capable of handling as quickly as
possible, and to increase the responsibility
and amount of work the individual is to handle
over time;
``(G) shall describe what services the State
will provide the individual so that the
individual will be able to obtain and keep
employment in the private sector, and describe
the job counseling and other services that will
be provided by the State; and
``(H) at the option of the State, may require
the individual to undergo appropriate substance
abuse treatment.
``(2) Timing.--The State agency shall comply with
paragraph (1) with respect to an individual--
``(A) within 90 days (or, at the option of
the State, 180 days) after the effective date
of this part, in the case of an individual who,
as of such effective date, is a recipient of
assistance under the State plan approved under
this part; or
``(B) within 30 days (or, at the option of
the State, 90 days) after the individual is
determined to be eligible for such assistance,
in the case of any other individual.
``(c) Provision of Program and Employment Information.--The
State shall inform all applicants for and recipients of
assistance under the State plan approved under this part of all
available services under the State plan for which they are
eligible.
``(d) Requirement That Recipients Enter the Work First
Program.--
``(1) In general.--Beginning with fiscal year 2004,
the State shall place recipients of assistance under
the State plan approved under this part, who have not
become employed in the private sector within 1 year
after signing an individual responsibility plan, in the
first available slot in the State program established
under part F, except as provided in paragraph (2).
``(2) Exceptions.--A state may not be required to
place a recipient of such assistance in the State
program established under part F if the recipient--
``(A) is ill, incapacitated, or of advanced
age;
``(B) has not attained 18 years of age;
``(C) is caring for a child or parent who is
ill or incapacitated; or
``(D) is enrolled in school or in educational
or training programs that will lead to private
sector employment.
``(e) Penalties.--
``(1) State not operating a work first or workfare
program.--In the case of a State that is not operating
a program under part F or G:
``(A) Failure to comply with individual
responsibility plan or agreement of mutual
responsibility.--
``(i) Progressive reductions in
assistance for 1st and 2nd failures.--
The amount of assistance otherwise to
be provided under the State plan
approved under this part to a family
that includes an individual who fails
without good cause to comply with an
individual responsibility plan (or, if
the State has established a program
under subpart 1 of part F and the
individual is required to participate
in the program, an agreement of mutual
responsibility) signed by the
individual (other than by reason of
conduct described in paragraph (2))
shall be reduced by--
``(I) 33 percent for the 1st
such act of noncompliance; or
``(II) 66 percent for the 2nd
such act of noncompliance.
``(ii) Denial of assistance for 3rd
failure.--In the case of the 3rd such
act of noncompliance, the family of
which the individual is a member shall
not thereafter be eligible for
assistance under the State plan
approved under this part.
``(iii) Acts of noncompliance.--For
purposes of this paragraph, a 1st act
of noncompliance by an individual that
continues for more than 1 calendar
month shall be considered a 2nd act of
noncompliance, and a 2nd act of
noncompliance that continues for more
than 3 calendar months shall be
considered a 3rd act of noncompliance.
``(B) Denial of assistance to adults refusing
to work, look for work, or accept a bona fide
offer of employment.--
``(i) Refusal to work or look for
work.--If an unemployed individual who
has attained 18 years of age refuses to
work or look for work--
``(I) in the case of the 1st
such refusal, assistance under
the State plan approved under
this part shall not be payable
with respect to the individual
until the later of--
``(aa) a period of
not less than 6 months
after the date of the
first such refusal; or
``(bb) the first date
the individual agrees
to work or look for
work; or
``(II) in the case of the 2nd
such refusal, the family of
which the individual is a
member shall not thereafter be
eligible for assistance under
the State plan approved under
this part.
``(ii) Refusal to accept a bona fide
offer of employment.--If an unemployed
individual who has attained 18 years of
age refuses to accept a bona fide offer
of employment, the family of which the
individual is a member shall not
thereafter be eligible for assistance
under the State plan approved under
this part.
``(2) Other states.--In the case of any other State,
the State shall reduce, by such amount as the State
considers appropriate, the amount of assistance
otherwise payable under the State plan approved under
this part to a family that includes an individual who
fails without good cause to comply with an individual
responsibility plan signed by the individual.
``SEC. 404. PAYMENT OF ASSISTANCE.
``(a) Standards of Assistance.--The State plan shall specify
standards of assistance, including--
``(1) the composition of the unit for which
assistance will be provided;
``(2) a standard, expressed in money amounts, to be
used in determining the need of applicants and
recipients;
``(3) a standard, expressed in money amounts, to be
used in determining the amount of the assistance
payment; and
``(4) the methodology to be used in determining the
payment amount received by assistance units.
``(b) Level of Assistance.--Except as otherwise provided in
this title, the State plan shall provide that--
``(1) the determination of need and the amount of
assistance for all applicants and recipients shall be
made on an objective and equitable basis; and
``(2) families of similar composition with similar
needs and circumstances shall be treated similarly.
``(c) Correction of Payments.--The State plan shall provide
that the State agency will promptly take all necessary steps to
correct any overpayment or underpayment of assistance under
such plan, including the request for Federal tax refund
intercepts as provided under section 416.
``(d) Optional Voluntary Diversion Program.--The State plan
shall, at the option of the State, and in such part or parts of
the State as the State may select, provide that--
``(1) upon the recommendation of the caseworker who
is handling the case of a family eligible for
assistance under the State plan, the State shall, in
lieu of any other assistance under the State plan to
the family during a time period of not more than 3
months, make a lump-sum payment to the family for the
time period in an amount not to exceed--
``(A) the value of the monthly benefits that
would otherwise be provided to the family under
the State plan; multiplied by
``(B) the number of months in the time
period;
``(2) a lump-sum payment pursuant to subparagraph (A)
shall not be made more than once to any family; and
``(3) if, during a time period for which the State
has made a lump-sum payment to a family pursuant to
subparagraph (A), the family applies for and (but for
the lump-sum payment) would be eligible under the State
plan for a monthly benefit that is greater than the
value of the monthly benefit which would have been
provided to the family under the State plan at the time
of the calculation of the lump sum payment, then,
notwithstanding subparagraph (A), the State shall, for
that part of the time period that remains after the
family becomes eligible for the greater monthly
benefit, provide monthly benefits to the family in an
amount not to exceed--
``(A) the amount by which the value of the
greater monthly benefit exceeds the value of
the former monthly benefit, multiplied by the
number of months in the time period; divided by
``(B) the whole number of months remaining in
the time period.
``SEC. 405. OTHER PROGRAMS.
``(a) Work First Program; Workfare or Job Placement Voucher
Program.--The State plan shall provide that the State has in
effect and operation--
``(1) a work first program that meets the
requirements of part F; and
``(2) a workfare program that meets the requirements
of part G, or a job placement voucher program that
meets the requirements of part H, but not both.
``(b) Provision of Positions and Vouchers.--The State plan
shall provide that the State shall provide a position in the
workfare program established by the State under part G, or a
job placement voucher under the job placement voucher program
established by the State under part H to any individual who, by
reason of section 487(b), is prohibited from participating in
the work first program operated by the State, and shall not
provide such a position or such a voucher to any other
individual.
``(c) Provision of Case Management Services.--The State plan
shall provide that the State shall provide to participants in
such programs such case management services as are necessary to
ensure the integrated provision of benefits and services under
such programs.
``(d) State Child Support Agency.--The State plan shall--
``(1) provide that the State has in effect a plan
approved under part D and operates a child support
program in substantial compliance with such plan;
``(2) provide that the State agency administering the
plan approved under this part shall be responsible for
assuring that--
``(A) the benefits and services provided
under plans approved under this part and part D
are furnished in an integrated manner,
including coordination of intake procedures
with the agency administering the plan approved
under part D;
``(B) all applicants for, and recipients of,
temporary employment assistance are encouraged,
assisted, and required (as provided under
section 403(b)(1)(E)(ii)) to cooperate in the
establishment and enforcement of paternity and
child support obligations and are notified
about the services available under the State
plan approved under part D; and
``(C) procedures require referral of
paternity and child support enforcement cases
to the agency administering the plan approved
under part D not later than 10 days after the
application for temporary employment
assistance; and
``(3) provide for prompt notice (including the
transmittal of all relevant information) to the State
child support collection agency established pursuant to
part D of the furnishing of temporary employment
assistance with respect to a child who has been
deserted or abandoned by a parent (including a child
born out-of-wedlock without regard to whether the
paternity of such child has been established).
``(e) Child Welfare Services and Foster Care and Adoption
Assistance.--The State plan shall provide that the State has in
effect--
``(1) a State plan for child welfare services
approved under part B; and
``(2) a State plan for foster care and adoption
assistance approved under part E,
and operates such plans in substantial compliance with the
requirements of such parts.
``(f) Report of Child Abuse, etc.--The State plan shall
provide that the State agency will--
``(1) report to an appropriate agency or official,
known or suspected instances of physical or mental
injury, sexual abuse or exploitation, or negligent
treatment or maltreatment of a child receiving
assistance under the State plan under circumstances
which indicate that the child's health or welfare is
threatened thereby; and
``(2) provide such information with respect to a
situation described in paragraph (1) as the State
agency may have.
``(g) Availability of Assistance in Rural Areas of State.--
The State plan shall consider and address the needs of rural
areas in the State to ensure that families in such areas
receive assistance to become self-sufficient.
``(h) Family Preservation.--
``(1) In general.--The State plan shall describe the
efforts by the State to promote family preservation and
stability, including efforts--
``(A) to encourage fathers to stay home and
be a part of the family;
``(B) to keep families together to the extent
possible; and
``(C) except to the extent provided in
paragraph (2), to treat 2-parent families and
1-parent families equally with respect to
eligibility for assistance.
``(2) Maintenance of treatment.--The State may impose
eligibility limitations relating specifically to 2-
parent families to the extent such limitations are no
more restrictive than such limitations in effect in the
State plan in fiscal year 1995.
``SEC. 406. ADMINISTRATIVE REQUIREMENTS FOR STATE PLAN.
``(a) Statewide Plan.--The State plan shall be in effect in
all political subdivisions of the State, and, if administered
by the subdivisions, be mandatory upon such subdivisions. If
such plan is not administered uniformly throughout the State,
the plan shall describe the administrative variations.
``(b) Single Administrating Agency.--The State plan shall
provide for the establishment or designation of a single State
agency to administer the plan or supervise the administration
of the plan.
``(c) Financial Participation.--The State plan shall provide
for financial participation by the State in the same manner and
amount as such State participates under title XIX, except that
with respect to the sums expended for the administration of the
State plan, the percentage shall be 50 percent.
``(d) Reasonable Promptness.--The State plan shall provide
that all individuals wishing to make application for temporary
employment assistance shall have opportunity to do so, and that
such assistance be furnished with reasonable promptness to all
eligible individuals.
``(e) Automated Data Processing System.--The State plan
shall, at the option of the State, provide for the
establishment and operation of an automated statewide
management information system designed effectively and
efficiently, to assist management in the administration of the
State plan approved under this part, so as--
``(1) to control and account for--
``(A) all the factors in the total
eligibility determination process under such
plan for assistance, and
``(B) the costs, quality, and delivery of
payments and services furnished to applicants
for and recipients of assistance; and
``(2) to notify the appropriate officials for child
support, food stamp, and social service programs, and
the medical assistance program approved under title
XIX, whenever a recipient becomes ineligible for such
assistance or the amount of assistance provided to a
recipient under the State plan is changed.
``(f) Disclosure of Information.--The State plan shall
provide for safeguards which restrict the use or disclosure of
information concerning applicants or recipients.
``(g) Detection of Fraud.--The State plan shall provide, in
accordance with regulations issued by the Secretary, for
appropriate measures to detect fraudulent applications for
temporary employment assistance before the establishment of
eligibility for such assistance.
``Subpart 2--Administrative Provisions
``SEC. 411. APPROVAL OF PLAN.
``(a) In General.--The Secretary shall approve a State plan
which fulfills the requirements under subpart 1 within 120 days
of the submission of the plan by the State to the Secretary.
``(b) Deemed Approval.--If a State plan has not been rejected
by the Secretary during the period specified in subsection (a),
the plan shall be deemed to have been approved.
``SEC. 412. COMPLIANCE.
In the case of any State plan for temporary employment
assistance which has been approved under section 411, if the
Secretary, after reasonable notice and opportunity for hearing
to the State agency administering or supervising the
administration of such plan, finds that in the administration
of the plan there is a failure to comply substantially with any
provision required by subpart 1 to be included in the plan, the
Secretary shall notify such State agency that further payments
will not be made to the State (or in the Secretary's
discretion, that payments will be limited to categories under
or parts of the State plan not affected by such failure) until
the Secretary is satisfied that such prohibited requirement is
no longer so imposed, and that there is no longer any such
failure to comply. Until the Secretary is so satisfied the
Secretary shall make no further payments to such State (or
shall limit payments to categories under or parts of the State
plan not affected by such failure).
``SEC. 413. PAYMENTS TO STATES.
``(a) Computation of Amount.--Subject to section 412, from
the sums appropriated therefor, the Secretary of the Treasury
shall pay to each State which has an approved plan for
temporary employment assistance, for each quarter, beginning
with the quarter commencing October 1, 1996, an amount equal to
the Federal medical assistance percentage (as defined in
section 1905(b)) of the expenditures by the State under such
plan.
``(b) Method of Computation and Payment.--The method of
computing and paying such amounts shall be as follows:
``(1) The Secretary shall, prior to the beginning of
each quarter, estimate the amount to be paid to the
State for such quarter under the provisions of
subsection (a), such estimate to be based on--
``(A) a report filed by the State containing
its estimate of the total sum to be expended in
such quarter in accordance with the provisions
of such subsection and stating the amount
appropriated or made available by the State and
its political subdivisions for such
expenditures in such quarter, and if such
amount is less than the State's proportionate
share of the total sum of such estimated
expenditures, the source or sources from which
the difference is expected to be derived;
``(B) records showing the number of needy
children in the State; and
``(C) such other information as the Secretary
may find necessary.
``(2) The Secretary of Health and Human Services
shall then certify to the Secretary of the Treasury the
amount so estimated by the Secretary of Health and
Human Services--
``(A) reduced or increased, as the case may
be, by any sum by which the Secretary of Health
and Human Services finds that the estimate for
any prior quarter was greater or less than the
amount which should have been paid to the State
for such quarter;
``(B) reduced by a sum equivalent to the pro
rata share to which the Federal Government is
equitably entitled, as determined by the
Secretary of Health and Human Services, of the
net amount recovered during any prior quarter
by the State or any political subdivision
thereof with respect to temporary employment
assistance furnished under the State plan; and
``(C) reduced by such amount as is necessary
to provide the appropriate reimbursement to the
Federal Government that the State is required
to make under section 457 out of that portion
of child support collections retained by the
State pursuant to such section,
except that such increases or reductions shall not be
made to the extent that such sums have been applied to
make the amount certified for any prior quarter greater
or less than the amount estimated by the Secretary of
Health and Human Services for such prior quarter.
``(c) Method of Payment.--The Secretary of the Treasury shall
thereupon, through the Fiscal Service of the Department of the
Treasury and prior to audit or settlement by the General
Accounting Office, pay to the State, at the time or times fixed
by the Secretary of Health and Human Services, the amount so
certified.
``SEC. 414. QUALITY ASSURANCE, DATA COLLECTION, AND REPORTING SYSTEM.
``(a) Quality Assurance.--
``(1) In general.--Under the State plan, a quality
assurance system shall be developed based upon a
collaborative effort involving the Secretary, the
State, the political subdivisions of the State, and
assistance recipients, and shall include quantifiable
program outcomes related to self sufficiency in the
categories of welfare-to-work, payment accuracy, and
child support.
``(2) Modifications to system.--As deemed necessary,
but not more often than every 2 years, the Secretary,
in consultation with the State, the political
subdivisions of the State, and assistance recipients,
shall make appropriate changes in the design and
administration of the quality assurance system,
including changes in benchmarks, measures, and data
collection or sampling procedures.
``(b) Data Collection and Reporting.--
``(1) In general.--The State plan shall provide for a
quarterly report to the Secretary regarding the data
described in paragraphs (2) and (3) and such additional
data needed for the quality assurance system. The data
collection and reporting system under this subsection
shall promote accountability, continuous improvement,
and integrity in the State plans for temporary
employment assistance and Work First.
``(2) Disaggregated data.--The State shall collect
the following data items on a monthly basis from
disaggregated case records of applicants for and
recipients of temporary employment assistance from the
previous month:
``(A) The age of adults and children
(including pregnant women).
``(B) Marital or familial status of cases:
married (2-parent family), widowed, divorced,
separated, or never married; or child living
with other adult relative.
``(C) The gender, race, educational
attainment, work experience, disability status
(whether the individual is seriously ill,
incapacitated, or caring for a disabled or
incapacitated child) of adults.
``(D) The amount of cash assistance and the
amount and reason for any reduction in such
assistance. Any other data necessary to
determine the timeliness and accuracy of
benefits and welfare diversions.
``(E) Whether any member of the family
receives benefits under any of the following:
``(i) Any housing program.
``(ii) The food stamp program under
the Food Stamp Act of 1977.
``(iii) The Head Start programs
carried out under the Head Start Act.
``(iv) Any job training program.
``(F) The number of months since the most
recent application for assistance under the
plan.
``(G) The total number of months for which
assistance has been provided to the families
under the plan.
``(H) The employment status, hours worked,
and earnings of individuals while receiving
assistance, whether the case was closed due to
employment, and other data needed to meet the
work performance rate.
``(I) Status in Work First and workfare,
including the number of hours an individual
participated and the component in which the
individual participated.
``(J) The number of persons in the assistance
unit and their relationship to the youngest
child. Nonrecipients in the household and their
relationship to the youngest child.
``(K) Citizenship status.
``(L) Shelter arrangement.
``(M) Unearned income (not including
temporary employment assistance), such as child
support, and assets.
``(N) The number of children who have a
parent who is deceased, incapacitated, or
unemployed.
``(O) Geographic location.
``(3) Aggregated data.--The State shall collect the
following data items on a monthly basis from aggregated
case records of applicants for and recipients of
temporary employment assistance from the previous
month:
``(A) The number of adults receiving
assistance.
``(B) The number of children receiving
assistance.
``(C) The number of families receiving
assistance.
``(D) The number of assistance units who had
their grants reduced or terminated and the
reason for the reduction or termination,
including sanction, employment, and meeting the
time limit for assistance).
``(E) The number of applications for
assistance; the number approved and the number
denied and the reason for denial.
``(4) Longitudinal studies.--The State shall submit
selected data items for a cohort of individuals who are
tracked over time. This longitudinal sample shall be
used for selected data items described in paragraphs
(2) and (3), as determined appropriate by the
Secretary.
``(c) Additional Data.--The report required by subsection (b)
for a fiscal year quarter shall also include the following:
``(1) Report on use of federal funds to cover
administrative costs and overhead.--A statement of--
``(A) the percentage of the Federal funds
paid to the State under this part for the
fiscal year quarter that are used to cover
administrative costs or overhead; and
``(B) the total amount of State funds that
are used to cover such costs or overhead.
``(2) Report on state expenditures on programs for
needy families.--A statement of the total amount
expended by the State during the fiscal year quarter on
programs for needy families, with the amount spent on
the program under this part, and the purposes for which
such amount was spent, separately stated.
``(3) Report on noncustodial parents participating in
work activities.--The number of noncustodial parents in
the State who participated in work activities during
the fiscal year quarter.
``(4) Report on child support collected.--The total
amount of child support collected by the State agency
administering the State plan under part D on behalf of
a family receiving assistance under this part.
``(5) Report on child care.--The total amount
expended by the State for child care under this part,
along with a description of the types of child care
provided, such as child care provided in the case of a
family that has ceased to receive assistance under this
part because of increased hours of, or increased income
from, employment, or in the case of a family that is
not receiving assistance under this part but would be
at risk of becoming eligible for such assistance if
child care was not provided.
``(6) Report on transitional services.--The total
amount expended by the State for providing transitional
services to a family that has ceased to receive
assistance under this part because of increased hours
of, or increased income from, employment, along with a
description of such services.
``(d) Collection Procedures.--The Secretary shall provide
case sampling plans and data collection procedures as deemed
necessary to make statistically valid estimates of plan
performance.
``(e) Verification.--The Secretary shall develop and
implement procedures for verifying the quality of the data
submitted by the State, and shall provide technical assistance,
funded by the compliance penalties imposed * * *
* * * * * * *
SEC. 9201. EXTENSION OF PROVISION PROVIDING ADDITIONAL ELIGIBILITY FOR
MEDICAID.
Subsection (f) of section 1925 of the Social Security Act
(42 U.S.C. 1396r-6(f)) is amended by striking ``1998'' and
inserting ``2002''.
SEC. 9202. NOTICE OF AVAILABILITY REQUIRED TO BE PROVIDED TO APPLICANTS
AND FORMER RECIPIENTS OF TEMPORARY FAMILY
ASSISTANCE, FOOD STAMPS, AND MEDICAID.
(a) Temporary Family Assistance.--Section 406, as added by
the amendment made by section 9101(a) of this Act, is amended
by adding at the end the following:
``(h) Notice of Availability of EITC.--The State plan shall
provide that the State agency referred to in subsection (b)
must provide written notice of the existence and availability
of the earned income credit under section 32 of the Internal
Revenue Code of 1986 to--
``(1) any individual who applies for assistance under
the State plan, upon receipt of the application; and
``(2) any individual whose assistance under the State
plan (or under the State plan approved under part A of
this title (as in effect before the effective date of
title IX of the Omnibus Budget Reconciliation Act of
1995) is terminated, in the notice of termination of
benefits.''.
(b) Food Stamps.--Section 11(e) of the Food Stamp Act of
1977 (7 U.S.C. 2020(e)) is amended--
(1) in paragraph (24) by striking ``and'' at the end;
(2) in paragraph (25) by striking the period at the
end and inserting ``; and''; and
(3) by inserting after paragraph (25) the following:
``(26) that whenever a household applies for food
stamp benefits, and whenever such benefits are
terminated with respect to a household, the State
agency shall provide to each member of such household
notice of--
``(A) the existence of the earned income tax
credit under section 32 of the Internal Revenue
Code of 1986; and
``(B) the fact that such credit may be
applicable to such member.''.
(c) Medicaid.--Section 1902(a) (42 U.S.C. 1396a(a)) is
amended--
(1) by striking ``and'' at the end of paragraph (61);
(2) by striking the period at the end of paragraph
(62) and inserting ``; and''; and
(3) by inserting after paragraph (62) the following
new paragraph:
``(63) provide that the State shall provide notice of
the existence and availability of the earned income tax
credit under section 32 of the Internal Revenue Code of
1986 to each individual applying for medical assistance
under the State plan and to each individual whose
eligibility for medical assistance under the State plan
is terminated.''.
SEC. 9203. NOTICE OF AVAILABILITY OF EARNED INCOME TAX CREDIT AND
DEPENDENT CARE TAX CREDIT TO BE INCLUDED ON W-4
FORM.
(a) In General.--Section 11114 of the Omnibus Budget
Reconciliation Act of 1990 (26 U.S.C. 21 note), relating to
program to increase public awareness, is amended by adding at
the end the following new sentence: ``Such means shall include
printing a notice of the availability of such credits on the
forms used by employees to determine the proper number of
withholding exemptions under chapter 24 of such Code.''
SEC. 9204. ADVANCE PAYMENT OF EARNED INCOME TAX CREDIT THROUGH STATE
DEMONSTRATION PROGRAMS.
(a) In General.--Section 3507 of the Internal Revenue Code
of 1986 (relating to the advance payment of the earned income
tax credit) is amended by adding at the end the following:
``(g) State Demonstrations.--
``(1) In general.--In lieu of receiving earned income
advance amounts from an employer under subsection (a),
a participating resident shall receive advance earned
income payments from a responsible State agency
pursuant to a State Advance Payment Program that is
designated pursuant to paragraph (2).
``(2) Designations.--
``(A) In general.--From among the States
submitting proposals satisfying the
requirements of paragraph (3), the Secretary
(in consultation with the Secretary of Health
and Human Services) may designate not more than
4 State Advance Payment Demonstrations. States
selected for the demonstrations may have, in
the aggregate, no more than 5 percent of the
total number of households participating in the
program under the Food Stamp program in the
immediately preceding fiscal year.
Administrative costs of a State in conducting a
demonstration under this section may be
included for matching under section 413(a) of
the Social Security Act and section 16(a) of
the Food Stamp Act of 1977.
``(B) When designation may be made.--Any
designation under this paragraph shall be made
no later than December 31, 1996.
``(C) Period for which designation is in
effect.--
``(i) In general.--Designations made
under this paragraph shall be effective
for advance earned income payments made
after December 31, 1996, and before
January 1, 2000.
``(ii) Special rules.--
``(I) Revocation of
designations.--The Secretary
may revoke any designation made
under this paragraph if the
Secretary determines that the
State is not complying
substantially with the proposal
described in paragraph (3)
submitted by the State.
``(II) Automatic termination
of designations.--Any failure
by a State to comply with the
reporting requirements
described in paragraphs (3)(F)
and (3)(G) shall have the
effect of immediately
terminating the designation
under this paragraph and
rendering paragraph (5)(A)(ii)
inapplicable to subsequent
payments.
``(3) Proposals.--No State may be designated under
paragraph (2) unless the State's proposal for such
designation--
``(A) identifies the responsible State
agency,
``(B) describes how and when the advance
earned income payments will be made by that
agency, including a description of any other
State or Federal benefits with which such
payments will be coordinated,
``(C) describes how the State will obtain the
information on which the amount of advance
earned income payments made to each
participating resident will be determined in
accordance with paragraph (4),
``(D) describes how State residents who will
be eligible to receive advance earned income
payments will be selected, notified of the
opportunity to receive advance earned income
payments from the responsible State agency, and
given the opportunity to elect to participate
in the program,
``(E) describes how the State will verify, in
addition to receiving the certifications and
statement described in paragraph (7)(D)(iv),
the eligibility of participating residents for
the earned income tax credit,
``(F) commits the State to furnishing to each
participating resident by January 31 of each
year a written statement showing--
``(i) the name and taxpayer
identification number of the
participating resident, and
``(ii) the total amount of advance
earned income payments made to the
participating resident during the prior
calendar year,
``(G) commits the State to furnishing to the
Secretary by December 1 of each year a written
statement showing the name and taxpayer
identification number of each participating
resident,
``(H) commits the State to treat any advance
earned income payments as described in
paragraph (5) and any repayments of excessive
advance earned income payments as described in
paragraph (6),
``(I) commits the State to assess the
development and implementation of its State
Advance Payment Program, including an agreement
to share its findings and lessons with other
interested States in a manner to be described
by the Secretary, and
``(J) is submitted to the Secretary on or
before June 30, 1996.
``(4) Amount and timing of advance earned income
payments.--
``(A) Amount.--
``(i) In general.--The method for
determining the amount of advance
earned income payments made to each
participating resident shall conform to
the fullest extent possible with the
provisions of subsection (c).
``(ii) Special rule.--A State may, at
its election, apply the rules of
subsection (c)(2)(B) by substituting
`between 60 percent and 75 percent of
the credit percentage in effect under
section 32(b)(1) for an individual with
the corresponding number of qualifying
children' for `60 percent of the credit
percentage in effect under section
32(b)(1) for such an eligible
individual with 1 qualifying child' in
clause (i) and `the same percentage (as
applied in clause (i))' for `60
percent' in clause (ii).
``(B) Timing.--The frequency of advance
earned income payments may be determined on the
basis of the payroll periods of participating
residents, on a single statewide schedule, or
on any other reasonable basis prescribed by the
State in its proposal; however, in no event may
advance earned income payments be made to any
participating resident less frequently than on
a calendar-quarter basis.
``(5) Payments to be treated as payments of
withholding and fica taxes.--
``(A) In general.--For purposes of this
title, advance earned income payments during
any calendar quarter--
``(i) shall neither be treated as a
payment of compensation nor be included
in gross income, and
``(ii) shall be treated as made out
of--
``(I) amounts required to be
deducted by the State and
withheld for the calendar
quarter by the State under
section 3401 (relating to wage
withholding),
``(II) amounts required to be
deducted for the calendar
quarter under section 3102
(relating to FICA employee
taxes), and
``(III) amounts of the taxes
imposed on the State for the
calendar quarter under section
3111 (relating to FICA employer
taxes),
as if the State had paid to the
Secretary, on the day on which payments
are made to participating residents, an
amount equal to such payments.
``(B) If advance payments exceed taxes due.--
If for any calendar quarter the aggregate
amount of advance earned income payments made
by the responsible State agency under a State
Advance Payment Program exceeds the sum of the
amounts referred to in subparagraph (A)(ii)
(without regard to paragraph (6)(A)), each such
advance earned income payment shall be reduced
by an amount which bears the same ratio to such
excess as such advance earned income payment
bears to the aggregate amount of all such
advance earned income payments.
``(6) State repayment of excessive advance earned
income payments.--
``(A) In general.--Notwithstanding any other
provision of law, in the case of an excessive
advance earned income payment a State shall be
treated as having deducted and withheld under
section 3401 (relating to wage withholding),
and as being required to pay to the United
States, the repayment amount during the
repayment calendar quarter.
``(B) Excessive advance earned income
payment.--For purposes of this section, the
term `excessive advance income payment' means
that portion of any advance earned income
payment that, when combined with other advance
earned income payments previously made to the
same participating resident during the same
calendar year, exceeds the amount of earned
income tax credit to which that participating
resident is entitled under section 32 for that
year.
``(C) Repayment amount.--For purposes of this
subsection, the term `repayment amount' means
an amount equal to 50 percent of the excess
of--
``(i) excessive advance earned income
payments made by a State during a
particular calendar year, over
``(ii) the sum of--
``(I) 4 percent of all
advance earned income payments
made by the State during that
calendar year, and
``(II) the excessive advance
earned income payments made by
the State during that calendar
year that have been collected
from participating residents by
the Secretary.
``(D) Repayment calendar quarter.--For
purposes of this subsection, the term
`repayment calendar quarter' means the second
calendar quarter of the third calendar year
beginning after the calendar year in which an
excessive earned income payment is made.
``(7) Definitions.--For purposes of this subsection--
``(A) State advance payment program.--The
term `State Advance Payment Program' means the
program described in a proposal submitted for
designation under paragraph (1) and designated
by the Secretary under paragraph (2).
``(B) Responsible state agency.--The term
`responsible State agency' means the single
State agency that will be making the advance
earned income payments to residents of the
State who elect to participate in a State
Advance Payment Program.
``(C) Advance earned income payments.--The
term `advance earned income payments' means an
amount paid by a responsible State agency to
residents of the State pursuant to a State
Advance Payment Program.
``(D) Participating resident.--The term
`participating resident' means an individual
who--
``(i) is a resident of a State that
has in effect a designated State
Advance Payment Program,
``(ii) makes the election described
in paragraph (3)(D) pursuant to
guidelines prescribed by the State,
``(iii) certifies to the State the
number of qualifying children the
individual has, and
``(iv) provides to the State the
certifications and statement described
in subsections (b)(1), (b)(2), (b)(3),
and (b)(4) (except that for purposes of
this clause, the term `any employer'
shall be substituted for `another
employer' in subsection (b)(3)), along
with any other information required by
the State.''.
(b) Technical Assistance.--The Secretaries of the Treasury
and Health and Human Services shall jointly ensure that
technical assistance is provided to State Advance Payment
Programs and that these programs are rigorously evaluated.
(c) Annual Reports.--The Secretary shall issue annual
reports detailing the extent to which--
(1) residents participate in the State Advance
Payment Programs,
(2) participating residents file Federal and State
tax returns,
(3) participating residents report accurately the
amount of the advance earned income payments made to
them by the responsible State agency during the year,
and
(4) recipients of excessive advance earned income
payments repay those amounts.
The report shall also contain an estimate of the amount of
advance earned income payments made by each responsible State
agency but not reported on the tax returns of a participating
resident and the amount of excessive advance earned income
payments.
(d) Authorization of Appropriations.--For purposes of
providing technical assistance described in subsection (b),
preparing the reports described in subsection (c), and
providing grants to States in support of designated State
Advance Payment Programs, there are authorized to be
appropriated in advance to the Secretary of the Treasury and
the Secretary of Health and Human Services a total of
$1,400,000 for fiscal years 1997 through 2000.
SEC. 9205. CONSOLIDATED CHILD CARE DEVELOPMENT BLOCK GRANT.
(a) Purpose.--It is the purpose of this section to--
(1) eliminate program fragmentation and create a
seamless system of high quality child care that allows
for continuity of care for children as parents move
from welfare to work;
(2) provide for parental choice among high quality
child care programs; and
(3) increase the availability of high quality
affordable child care in order to promote self
sufficiency and support working families.
(b) Amendments to Child Care and Development Block Grant
Act of 1990.--
(1) Appropriations.--Section 658B of the Child Care
and Development Block Grant Act of 1990 (42 U.S.C.
9858) is amended to read as follows:
``SEC. 658B. APPROPRIATION.
``(a) Authorization of Appropriations of Block Grant
Funds.--For the purpose of providing child care services for
eligible children through the awarding of grants to States
under this subchapter (other than the grants awarded under
subsection (b)) by the Secretary, there are authorized to be
appropriated, $1,000,000,000 for fiscal year 1996 and such sums
as may be necessary for fiscal years 1997 through 2002.
``(b) Appropriations of Federal Matching Funds.--For the
purpose of providing child care services for eligible children
through the awarding of matching grants to States under section
658J(d) by the Secretary, there are authorized to be
appropriated and are hereby appropriated, baseline plus
$500,000,000 for fiscal year 1996, baseline plus $500,000,000
for fiscal year 1997, baseline plus $500,000,000 for fiscal
year 1998, baseline plus $500,000,000 for fiscal year 1999,
baseline plus $500,000,000 for fiscal year 2000, baseline plus
$500,000,000 for fiscal year 2001, and baseline plus
$500,000,000 for fiscal year 2002.''.
(2) Use of funds.--Section 658E(c)(3)(B) of the Child
Care and Development Block Grant Act of 1990 (42 U.S.C.
9858c(c)(3)(B)) is amended--
(A) in clause (i), by striking ``with very
low family incomes (taking into consideration
family size)'' and inserting ``described in
clause (ii) (in the order so described)'';
(B) by redesignating clauses (i) and (ii) as
subclauses (I) and (II), respectively, and
realigning the margins accordingly;
(C) by striking ``Subject'' and inserting the
following:
``(i) In general.--Subject''; and
(D) by adding at the end the following new
clause:
``(ii) Families described.--The
families described in this clause are
the following:
``(I) Families containing an
individual receiving assistance
under a State plan approved
under part A of title IV of the
Social Security Act and
participating in education, job
search, job training, work, or
workfare programs.
``(II) Families containing an
individual who--
``(aa) no longer
qualifies for child
care assistance under
section 405(b) of the
Social Security Act
because such individual
has ceased to receive
assistance under the
temporary employment
assistance program
under part A of title
IV of the Social
Security Act as a
result of increased
hours of, or increased
income from,
employment; and
``(bb) the State
determines requires
such child care
assistance in order to
continue such
employment (but only
for the 1-year period
beginning on the date
that the individual no
longer qualifies for
child care assistance
under section 405(b) of
such Act, and, at the
option of the State,
for the additional 1-
year period beginning
after the conclusion of
the first 1-year
period).
``(III) Families containing
an individual who--
``(aa) is not
described in subclause
(I) or (II); and
``(bb) has an annual
income for a fiscal
year below 75 percent
of the State median
income.''.
(3) Set-asides for quality and expansion.--Section
658E(c)(3) of the Child Care and Development Block
Grant Act of 1990 (42 U.S.C. 9858c(c)(3))--
(A) in subparagraph (C), by striking ``25
percent'' and inserting ``10 percent''.
(4) Sliding fee scale.--Section 658E(c)(5) of the
Child Care and Development Block Grant Act of 1990 (42
U.S.C. 9858c(c)(5)) is amended by inserting ``described
in subclauses (II) and (III) of paragraph (3)(B)(ii)''
after ``families''.
(5) Matching requirement for new funds.--
``SEC. 418. FUNDING FOR CHILD CARE.
``(a) General Child Care Entitlement.--
``(1) General entitlement.--Subject to the amount
appropriated under 658(B)(b), each State shall, for the
purpose of providing child care assistance, be entitled
to payments under a grant under this subsection for a
fiscal year in an amount equal to--
``(A) the sum of the total amount required to
be paid to the State under former section 403
for fiscal year 1994 with respect to amounts
expended for child care under section--
``(i) 402(g) of this Act (as such
section was in effect before October 1,
1995); and
``(ii) 403(i) of this Act (as so in
effect); or
``(B) the average of the total amounts
required to be paid to the State for fiscal
years 1992 through 1994 under the sections
referred to in subparagraph (A);
whichever is greater.
``(2) Remainder.--
``(A) Grants.--The Secretary shall use any
amounts appropriated for a fiscal year under
658(B)(b)(3), and remaining after the
reservation described in paragraph (3) and
after grants are awarded under paragraph (1),
to make grants to States under this paragraph.
``(B) Amount.--Subject to subparagraph (C),
the amount of a grant awarded to a State for a
fiscal year under this paragraph shall be based
on the formula used for determining the amount
of Federal payments to the State under section
658(o).
``(C) Matching requirement.--The Secretary
shall pay to each eligible State in a fiscal
year an amount, under a grant under
subparagraph (A), equal to the Federal medical
assistance percentage for such State for fiscal
year 1994 (as defined in section 1905(b)) of so
much of the expenditures by the State for child
care in such year as exceed the State set-aside
for such State under subparagraph (A) for such
year and the amount of State expenditures in
fiscal year 1994 that equal the non-Federal
share for the programs described in
subparagraphs (A), (B) and (C) of paragraph
(1).
``(3) Redistribution.--With respect to any fiscal
year, if the Secretary determines that amounts under
any grant awarded to a State under this subsection for
such fiscal year will not be used by such State for
carrying out the purpose for which the grant is made,
the Secretary shall make such amounts available for
carrying out such purpose to 1 or more other States
which apply for such funds to the extent the Secretary
determines that such other States will be able to use
such additional amounts for carrying out such purpose.
Such available amounts shall be redistributed to a
State pursuant to section 402(i) (as such section was
in effect before October 1, 1995) by substituting `the
number of children residing in all States applying for
such funds' for `the number of children residing in the
United States in the second preceding fiscal year'. Any
amount made available to a State from an appropriation
for a fiscal year in accordance with the preceding
sentence shall, for purposes of this part, be regarded
as part of such State's payment (as determined under
this subsection) for such year.
``(e) Amounts Reserved for Indian Tribes.--The Secretary
shall reserve not more than 3 percent of the amount
appropriated under section 658B in each fiscal year for
payments to Indian tribes and tribal organizations with
applications approved under section 6580(c). The amounts
reserved under the prior sentence shall be available to make
grants to or enter into contracts with Indian tribes or tribal
organizations consistent with section 6580(c) without a
requirement of matching funds by the Indian tribes or tribal
organizations.
``(f) Same Treatment as Allotments.--Amounts paid to a
State or Indian tribe under subsections (d) and (e) shall be
subject to the same requirements under this subchapter as
amounts paid from the allotment under section 658O.''.
(B) Conforming amendments.--Section 658O of
the Child Care and Development Block Grant Act
of 1990 (42 U.S.C. 9858m) is amended--
(i) in subsection (a)--
(I) in paragraph (1), by
striking ``this subchapter''
and inserting section 658B(a);
and
(II) in paragraph (2), by
striking ``section 658B'' and
inserting ``section 658B(a);
and
(ii) in subsection (b)(1), by
striking ``section 658B'' and inserting
``section 658B(a)''.
(6) Improving quality.--
(A) Increase in required funding.--Section
658G of the Child Care and Development Block
Grant Act of 1990 (42 U.S.C. 9858e) is amended
by striking ``not less than 20 percent''.
(B) Quality improvement incentive
initiative.--Section 658G of the Child Care and
Development Block Grant Act of 1990 (42 U.S.C.
9858e) is amended--
(i) by striking ``A State'' and
inserting ``(a) In General.--A State'';
(ii) by adding at the end the
following new subparagraphs:
``(6) Before and after-school activities.--Increasing
the availability of before and after-school care.
``(7) Infant care.--Increasing the availability of
child care for infants under the age of 18 months.
``(8) Nontraditional work hours.--Increasing the
availability of child care between the hours of 5:00
p.m. and 8:00 a.m.''
(iii) by adding at the end the
following new subsection:
``(b) Quality Improvement Incentive Initiative.--
``(1) In general.--The Secretary shall establish a
child care quality improvement incentive initiative to
make funds available to States that demonstrate
progress in the implementation of--
``(A) innovative teacher training programs
such as the Department of Defense staff
development and compensation program for child
care personnel; or
``(B) enhanced child care quality standards
and licensing and monitoring procedures.
``(2) Funding.--From the amounts made available for
each fiscal year under subsection (a), the Secretary
shall reserve not to exceed $250,000,000 in each such
fiscal year to carry out this subsection.''.
(7) Repeal--Section 658H of the Child Care and
Development Block Grant Act of 1990 (42 U.S.C. 9858f)
is repealed.
(8) Payments.--Section 658J(a) of the Child Care and
Development Block Grant Act of 1990 (42 U.S.C. 9858h)
is amended by striking ``Subject to the availability of
appropriation, a'' and inserting ``A''.
(9) Definition of poverty line.--Section 658P of the
Child Care and Development Block Grant Act of 1990 (42
U.S.C. 9858n) is amended--
(A) by redesignating paragraphs (10) through
(14) as paragraphs (11) through (15),
respectively; and
(B) by inserting after paragraph (9), the
following new paragraph:
``(10) Poverty line.--The term `poverty line' means
the poverty line (as such term is defined in section
673(2) of the Community Services Block Grant Act (42
U.S.C. 9902(2)), including any revision required by
such section) that--
``(A) in the case of a family of less than 4
individuals, is applicable to a family of the
size involved; and
``(B) in the case of a family of 4 or more
individuals, is applicable to a family of 4
individuals.''.
(c) Program Repeals.--
(1) State dependent care grants.--Subchapter E of
chapter 8 of subtitle A of title VI of the Omnibus
Budget Reconciliation Act of 1981 (42 U.S.C. 9871 et
seq.) is repealed.
(2) Child development associate scholarship
assistance act.--The Child Development Associate
Scholarship Assistance Act of 1985 (42 U.S.C. 10901 et
seq.) is repealed.
SEC. 9206. CERTAIN FEDERAL ASSISTANCE INCLUDIBLE IN GROSS INCOME.
(a) In General.--Part II of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 (relating to items specifically
included in gross income) is amended by adding at the end the
following new section:
``SEC. 91. CERTAIN FEDERAL ASSISTANCE.
``(a) In General.--Gross income shall include an amount equal
to the specified Federal assistance received by the taxpayer
during the taxable year.
``(b) Specified Federal Assistance.--For purposes of this
section--
``(1) In general.--The term `specified Federal
assistance' means--
``(A) supplemental security income benefits
under title XVI of the Social Security Act
(including supplemental security income
benefits of the type described in section 1616
of such Act or section 212 of Public Law 93-
66).''.
(b) Reporting.--
(1) In general.--Subpart B of part III of subchapter
A of chapter 61 of such Code is amended by adding at
the end the following new section:
``SEC. 6050Q. PAYMENTS OF CERTAIN FEDERAL ASSISTANCE.
``(a) Requirement of Reporting.--The appropriate official
shall make a return, according to the forms and regulations
prescribed by the Secretary, setting forth--
``(1) the aggregate amount of specified Federal
assistance paid to any individual during any calendar
year, and
``(2) the name, address, and TIN of such individual.
``(b) Statements To Be Furnished to Persons With Respect to
Whom Information Is Required.--Every person required to make a
return under subsection (a) shall furnish to each individual
whose name is required to be set forth in such return a written
statement showing--
``(1) the aggregate amount of payments made to the
individual which are required to be shown on such
return, and
``(2) the name of the agency making the payments.
The written statement required under the preceding sentence
shall be furnished to the individual on or before January 31 of
the year following the calendar year for which the return under
subsection (a) was required to be made.
``(c) Definitions and Special Rule.--For purposes of this
section--
``(1) Appropriate official.--The term `appropriate
official' means--
``(A) in the case of specified Federal
assistance described in section 91(b)(1)(A),
the head of the State agency administering the
plan under which such assistance is provided,
``(B) in the case of specified Federal
assistance described in section 91(b)(1)(B),
the head of the State agency administering the
program under which such assistance is
provided, and
``(C) in the case of specified Federal
assistance described in section 91(b)(1)(C),
the Secretary of Health and Human Services.
``(2) Specified federal assistance.--The term
`specified Federal assistance' has the meaning given
such term by section 91(b).
``(3) Amounts treated as paid.--The rules of section
91(c) shall apply for purposes of determining to whom
specified Federal assistance is paid.''
(2) Penalties.--
(A) Subparagraph (B) of section 6724(d)(1) of
such Code is amended by redesignating clauses
(ix) through (xiv) as clauses (x) through (xv),
respectively, and by inserting after clause
(viii) the following new clause:
``(ix) section 6050Q (relating to
payments of certain Federal
assistance),''.
(B) Paragraph (2) of section 6724(d) of such
Code is amended by redesignating subparagraphs
(Q) through (T) as subparagraphs (R) through
(U), respectively, and by inserting after
subparagraph (P) the following new
subparagraph:
``(Q) section 6050Q(b) (relating to payments
of certain Federal assistance),''.
(c) Supplemental Security Income Benefits Not Taken into
Account for Purposes of the Earned Income Tax Credit.--Section
32 of the Internal Revenue Code of 1986 (relating to the earned
income tax credit), is amended by adding at the end the
following new subsection:
``(k) Adjusted Gross Income Determined Without Regard to
Certain Federal Assistance.--For purposes of this section,
adjusted gross income shall be determined without regard to any
amount which is includible in gross income solely by reason of
section 91.''
(d) Clerical Amendments.--
(1) The table of sections for part II of subchapter B
of chapter 1 of such Code is amended by adding at the
end the following new item:
``Sec. 91. Certain Federal assistance.''.
(2) The table of sections for subpart B of part III
of subchapter A of chapter 61 of such Code is amended
by adding at the end the following new item:
``Sec. 6050Q. Payments of certain Federal assistance.''.
(e) Effective Date.--The amendments made by this section
shall apply to benefits received after December 31, 1995,
except that the amendment made by subsection (c) shall apply to
taxable years beginning after such date.
SEC. 9207. DEPENDENT CARE CREDIT TO BE REFUNDABLE; HIGH-INCOME
TAXPAYERS INELIGIBLE FOR CREDIT.
(a) Credit To Be Refundable.--
(1) In general.--Section 21 of the Internal Revenue
Code of 1986 (relating to expenses for household and
dependent care services necessary for gainful
employment) is hereby moved to subpart C of part IV of
subchapter A of chapter 1 of such Code (relating to
refundable credits) and inserted after section 34.
(2) Technical amendments.--
(A) Section 35 of such Code is redesignated
as section 36.
(B) Section 21 of such Code is redesignated
as section 35.
(C) Paragraph (1) of section 35(a) of such
Code (as redesignated by subparagraph (B)) is
amended by striking ``this chapter'' and
inserting ``this subtitle''.
(D) Subparagraph (C) of section 129(a)(2) of
such Code is amended by striking ``section
21(e)'' and inserting ``section 35(e)''.
(E) Paragraph (2) of section 129(b) of such
Code is amended by striking ``section
21(d)(2)'' and inserting ``section 35(d)(2)''.
(F) Paragraph (1) of section 129(e) of such
Code is amended by striking ``section
21(b)(2)'' and inserting ``section 35(b)(2)''.
(G) Subsection (e) of section 213 of such
Code is amended by striking ``section 21'' and
inserting ``section 35''.
(H) Paragraph (2) of section 1324(b) of title
31, United States Code, is amended by inserting
before the period ``, or from section 35 of
such Code''.
(I) The table of sections for subpart C of
part IV of subchapter A of chapter 1 of such
Code is amended by striking the item relating
to section 35 and inserting the following:
``Sec. 35. Expenses for household and dependent care services
necessary for gainful employment.
``Sec. 36. Overpayments of tax.''.
(J) The table of sections for subpart A of
such part IV is amended by striking the item
relating to section 21.
(b) Higher-Income Taxpayers Ineligible for Credit.--
Subsection (a) of section 35 of such Code, as redesignated by
subsection (a), is amended by adding at the end the following
new paragraph:
``(3) Phaseout of credit for higher-income
taxpayers.--The amount of the credit which would (but
for this paragraph) be allowed by this section shall be
reduced (but not below zero) by an amount which bears
the same ratio to such amount of credit as the excess
of the taxpayer's adjusted gross income for the taxable
year over $60,000 bears to $20,000. Any reduction
determined under the preceding sentence which is not a
multiple of $10 shall be rounded to the nearest
multiple of $10.''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 1996.
Subtitle C--Work First
SEC. 9301. WORK FIRST PROGRAM.
(a) Establishment and Operation of Program.--Title IV (42
U.S.C. 601 et seq.) is amended by striking part F and inserting
the following:
``Part F--Work First Program
``SEC. 481. STATE ROLE.
``(a) Program Requirements.--Any State may establish and
operate a work first program that meets the following
requirements:
``(1) Objective.--The objective of the program is for
each program participant to find and hold a full-time
unsubsidized paid job, and for this goal to be achieved
in a cost-effective fashion.
``(2) Method.--The method of the program is to
connect recipients of assistance under the State plan
approved under part A with the private sector labor
market as soon as possible and offer them the support
and skills necessary to remain in the labor market.
Each component of the program should be permeated with
an emphasis on employment and with an understanding
that minimum wage jobs are a stepping stone to more
highly paid employment. The program shall provide
recipients with education, training, job search and
placement, wage supplementation, temporary subsidized
jobs, or such other services that the State deems
necessary to help a recipient obtain private sector
employment.
``(3) Job creation.--The creation of jobs, with an
emphasis on private sector jobs, shall be a component
of the program and shall be a priority for each State
office with responsibilities under the program.
``(4) Forms of assistance.--The State shall provide
assistance to participants in the program in the form
of education, training, job placement services
(including vouchers for job placement services), work
supplementation programs, temporary subsidized job
creation, job counseling, assistance in establishing
microenterprises, or other services to provide
individuals with the support and skills necessary to
obtain and keep employment in the private sector.
``(5) 2-year limitation on participation.--The
program shall comply with section 487(b).
``(6) Agreements of mutual responsibility.--
``(A) In general.--The State agency shall
develop an agreement of mutual responsibility
for each program participant, which will be an
individualized comprehensive plan, developed by
the team and the participant, to move the
participant into a full-time unsubsidized job.
The agreement should detail the education,
training, or skills that the individual will be
receiving to obtain a full-time unsubsidized
job, and the obligations of the individual.
``(B) Hours of participation requirement.--
The agreement shall provide that the individual
shall participate in activities in accordance
with the agreement for--
``(i) not fewer than 20 hours per
week during fiscal years 1997 and 1998;
``(ii) not fewer than 25 hours per
week during fiscal year 1999; and
``(iii) not fewer than 30 hours per
week thereafter.
``(7) Caseload participation rates.--The program
shall comply with section 488.
``(8) Nondisplacement.--The program may not be
operated in a manner that results in--
``(A) the displacement of a currently
employed worker or position by a program
participant;
``(B) the replacement of an employee who has
been terminated with a program participant; or
``(C) the replacement of an individual who is
on layoff from the same position given to a
program participant or any equivalent position.
``(b) Annual Reports.--
``(1) Compliance with performance measures.--Each
State that operates a program under this part shall
submit to the Secretary annual reports that compare the
achievements of the program with the performance-based
measures established under section 488(c).
``(2) Compliance with participation rates.--Each
State that operates a program under this part for a
fiscal year shall submit to the Secretary a report on
the participation rate of the State for the fiscal
year.
``SEC. 482. REVAMPED JOBS PROGRAM.
``A State that establishes a program under this part may
operate a program similar to the program known as the `GAIN
Program' that has been operated by Riverside County,
California, under Federal law in effect immediately before the
date this part first applies to the State of California.
``SEC. 483. USE OF PLACEMENT COMPANIES.
``(a) In General.--A State that establishes a program under
this part may enter into contracts with private companies
(whether operated for profit or not for profit) for the
placement of participants in the program in positions of full-
time employment, preferably in the private sector, for wages
sufficient to eliminate the need of such participants for cash
assistance.
``(b) Required Contract Terms.--Each contract entered into
under this section with a company shall meet the following
requirements:
``(1) Provision of job readiness and support
services.--The contract shall require the company to
provide, to any program participant who presents to the
company a voucher issued under subsection (d) intensive
personalized support and job readiness services
designed to prepare the individual for employment and
ensure the continued success of the individual in
employment.
``(2) Payments.--
``(A) In general.--The contract shall provide
for payments to be made to the company with
respect to each program participant who
presents to the company a voucher issued under
subsection (d).
``(B) Structure.--The contract shall provide
for the majority of the amounts to be paid
under the contract with respect to a program
participant, to be paid after the company has
placed the participant in a position of full-
time employment and the participant has been
employed in the position for such period of not
less than 5 months as the State deems
appropriate.
``(c) Competitive Bidding Required.--Contracts under this
section shall be awarded only after competitive bidding.
``(d) Vouchers.--The State shall issue a voucher to each
program participant whose agreement of mutual responsibility
provides for the use of placement companies under this section,
indicating that the participant is eligible for the services of
such a company.
``SEC. 484. TEMPORARY SUBSIDIZED JOB CREATION.
``A State that establishes a program under this part may
establish a program similar to the program known as `JOBS Plus'
that has been operated by the State of Oregon under Federal law
in effect immediately before the date this part first applies
to the State of Oregon.
``SEC. 485. MICROENTERPRISE.
``(a) Grants and Loans to Nonprofit Organizations for the
Provision of Technical Assistance, Training, and Credit to Low
Income Entrepreneurs.--A State that establishes a program under
this part may make grants and loans to nonprofit organizations
to provide technical assistance, training, and credit to low
income entrepreneurs for the purpose of establishing
microenterprises.
``(b) Microenterprise Defined.--For purposes of this
subsection, the term `microenterprise' means a commercial
enterprise which has 5 or fewer employees, 1 or more of whom
owns the enterprise.
``SEC. 486. WORK SUPPLEMENTATION PROGRAM.
``(a) In General.--A State that establishes a program under
this part may institute a work supplementation program under
which the State, to the extent it considers appropriate, may
reserve the sums that would otherwise be payable under the
State plan approved under part A to participants in the program
and use the sums instead for the purpose of providing and
subsidizing jobs for the participants (as described in
subsection (c)(3) (A) and (B)), as an alternative to providing
such assistance to the participants.
``(b) State Flexibility.--
``(1) Nothing in this part, or in any State plan
approved under part A, shall be construed to prevent a
State from operating (on such terms and conditions and
in such cases as the State may find to be necessary or
appropriate) a work supplementation program in
accordance with this section and section 484 (as in
effect immediately before the date this part first
applies to the State).
``(2) Notwithstanding any other provision of law, a
State may adjust the levels of the standards of need
under the State plan as the State determines to be
necessary and appropriate for carrying out a work
supplementation program under this section.
``(3) Notwithstanding any other provision of law, a
State operating a work supplementation program under
this section may provide that the need standards in
effect in those areas of the State in which the program
is in operation may be different from the need
standards in effect in the areas in which the program
is not in operation, and the State may provide that the
need standards for categories of recipients may vary
among such categories to the extent the State
determines to be appropriate on the basis of ability to
participate in the work supplementation program.
``(4) Notwithstanding any other provision of law, a
State may make such further adjustments in the amounts
of assistance provided under the plan to different
categories of recipients (as determined under paragraph
(3)) in order to offset increases in benefits from
needs-related programs (other than the State plan
approved under part A) as the State determines to be
necessary and appropriate to further the purposes of
the work supplementation program.
``(5) In determining the amounts to be reserved and
used for providing and subsidizing jobs under this
section as described in subsection (a), the State may
use a sampling methodology.
``(6) Notwithstanding any other provision of law, a
State operating a work supplementation program under
this section, may reduce or eliminate the amount of
earned income to be disregarded under the State plan as
the State determines to be necessary and appropriate to
further the purposes of the work supplementation
program.
``(c) Rules Relating to Supplemented Jobs.--
``(1) A work supplementation program operated by a
State under this section may provide that any
individual who is an eligible individual (as determined
under paragraph (2)) shall take a supplemented job (as
defined in paragraph (3)) to the extent that
supplemented jobs are available under the program.
Payments by the State to individuals or to employers
under the work supplementation program shall be treated
as expenditures incurred by the State for temporary
employment assistance under part A except as limited by
subsection (d).
``(2) For purposes of this section, an eligible
individual is an individual who is in a category which
the State determines should be eligible to participate
in the work supplementation program, and who would, at
the time of placement in the job involved, be eligible
for assistance under an approved State plan if the
State did not have a work supplementation program in
effect.
``(3) For purposes of this subsection, a supplemented
job is--
``(A) a job provided to an eligible
individual by the State or local agency
administering the State plan under part A; or
``(B) a job provided to an eligible
individual by any other employer for which all
or part of the wages are paid by the State or
local agency.
A State may provide or subsidize under the program any
job which the State determines to be appropriate.
``(d) Cost Limitation.--The amount of the Federal payment to
a State under section 413 for expenditures incurred in making
payments to individuals and employers under a work
supplementation program under this subsection shall not exceed
an amount equal to the amount which would otherwise be payable
under such section if the family of each individual employed in
the program established in the State under this section had
received the maximum amount of assistance providable under the
State plan to such a family with no income (without regard to
adjustments under subsection (b) of this section) for the
lesser of--
``(1) 9 months; or
``(2) the number of months in which the individual
was employed in the program.
``(e) Rules of Interpretation.--
``(1) This section shall not be construed as
requiring the State or local agency administering the
State plan to provide employee status to an eligible
individual to whom the State or local agency provides a
job under the work supplementation program (or with
respect to whom the State or local agency provides all
or part of the wages paid to the individual by another
entity under the program), or as requiring any State or
local agency to provide that an eligible individual
filling a job position provided by another entity under
the program be provided employee status by the entity
during the first 13 weeks the individual fills the
position.
``(2) Wages paid under a work supplementation program
shall be considered to be earned income for purposes of
any provision of law.
``(f) Preservation of Medicaid Eligibility.--Any State that
chooses to operate a work supplementation program under this
section shall provide that any individual who participates in
the program, and any child or relative of the individual (or
other individual living in the same household as the
individual) who would be eligible for assistance under the
State plan approved under part A if the State did not have a
work supplementation program, shall be considered individuals
receiving assistance under the State plan approved under part A
for purposes of eligibility for medical assistance under the
State plan approved under title XIX.
``SEC. 487. PARTICIPATION RULES.
``(a) In General.--Except as provided in subsection (b), a
State that establishes a program under this part may require
any individual receiving assistance under the State plan
approved under part A to participate in the program.
``(b) 2-Year Limitation on Participation.--
``(1) In general.--Except as provided in paragraph
(2), an individual may not participate in a State
program established under this part if the individual
has participated in the State program established under
this part for 24 months after the date the individual
first signed an agreement of mutual responsibility
under this part, excluding any month during which the
individual worked for an average of at least 25 hours
per week in a private sector job.
``(2) Authority to allow repeat participation.--
``(A) In general.--Subject to subparagraph
(B) of this paragraph, a State may allow an
individual who, by reason of paragraph (1),
would be prohibited from participating in the
State program established under this part to
participate in the program for such additional
period or periods as the State determines
appropriate.
``(B) Limitation on percentage of repeat
participants.--
``(i) In general.--Except as provided
in clause (ii) of this subparagraph,
the number of individuals allowed under
subparagraph (A) to participate during
a program year in a State program
established under this part shall not
exceed--
``(I) 10 percent of the total
number of individuals who
participated in the State
program established under this
part or the State program
established under part H during
the immediately preceding
program year; or
``(II) in the case of fiscal
year 2004 or any succeeding
fiscal year, 15 percent of such
total number of individuals.
``(ii) Authority to increase
limitation.--
``(I) Petition.--A State may
request the Secretary to
increase to not more than 15
percent the percentage
limitation imposed by clause
(i)(I) for a fiscal year before
fiscal year 2004.
``(II) Authority to grant
request.--The Secretary may
approve a request made pursuant
to subclause (I) if the
Secretary deems it appropriate.
The Secretary shall develop
recommendations on the criteria
that should be applied in
evaluating requests under
subclause (I).
``SEC. 488. CASELOAD PARTICIPATION RATES; PERFORMANCE MEASURES.
``(a) Participation Rates.--
``(1) Requirement.--A State that operates a program
under this part shall achieve a participation rate for
the following fiscal years of not less than the
following percentage:
``Fiscal year: Percentage:
1997...................................................... 20
1998...................................................... 24
1999...................................................... 28
2000...................................................... 32
2001...................................................... 36
2002...................................................... 40
2003 or later............................................. 52.
``(2) Participation rate defined.--
``(A) In general.--As used in this
subsection, the term `participation rate'
means, with respect to a State and a fiscal
year, an amount equal to--
``(i) the average monthly number of
individuals who, during the fiscal
year, participate in the State program
established under this part or (if
applicable) part G or H; divided by
``(ii) the average monthly number of
individuals who are not described in
section 402(c)(1)(D) and for whom an
individual responsibility plan is in
effect under section 403 during the
fiscal year.
``(B) Special rule.--For each of the 1st 12
months after an individual ceases to receive
assistance under a State plan approved under
part A by reason of having become employed for
more than 25 hours per week in an unsubsidized
job in the private sector, the individual shall
be considered to be participating in the State
program established under this part, and to be
an adult recipient of such assistance, for
purposes of subparagraph (A).
``(3) State compliance reports.--Each State that
operates a program under this part for a fiscal year
shall submit to the Secretary a report on the
participation rate of the State for the fiscal year.
``(4) Effect of failure to meet participation
rates.--
``(A) In general.--If a State reports that
the State has failed to achieve the
participation rate required by paragraph (1)
for the fiscal year, the Secretary may make
recommendations for changes in the State
program established under this part and (if the
State has established a program under part G)
the State program established under part G. The
State may elect to follow such recommendations,
and shall demonstrate to the Secretary how the
State will achieve the required participation
rates.
``(B) Second consecutive failure.--
Notwithstanding subparagraph (A), if a State
fails to achieve the participation rate
required by paragraph (1) for 2 consecutive
fiscal years, the Secretary may--
``(i) require the State to make
changes in the State program
established under this part and (if the
State has established a program under
part G) the State program established
under part G; and
``(ii) reduce by 5 percent the amount
otherwise payable to the State under
section 413.
``(b) Performance Standards.--The Secretary shall develop
standards to be used to measure the effectiveness of the
programs established under this part and part G in moving
recipients of assistance under the State plan approved under
part A into full-time unsubsidized employment.
``(c) Performance-Based Measures.--
``(1) Establishment.--The Secretary shall, by
regulation, establish measures of the effectiveness of
the State programs established under this part and
under part G in moving recipients of assistance under
the State plan approved under part A into full-time
unsubsidized employment, based on the performance of
such programs.
``(2) Annual compliance reports.--Each State that
operates a program under this part shall submit to the
Secretary annual reports that compare the achievements
of the program with the performance-based measures
established under paragraph (1).
``SEC. 489. FEDERAL ROLE.
``(a) Approval of State Plans.--
``(1) In general.--Within 60 days after the date a
State submits to the Secretary a plan that provides for
the establishment and operation of a work first program
that meets the requirements of section 481, the
Secretary shall approve the plan.
``(2) Authority to extend approval deadline.--The 60-
day deadline established in paragraph (1) with respect
to a State may be extended in accordance with an
agreement between the Secretary and the State.
``(b) Performance-Based Measures.--The Secretary shall, by
regulation, establish measures of the effectiveness of the
State program established under this part and (if the State has
established a program under part G) the State program
established under part G in moving recipients of assistance
under the State plan approved under part A into full-time
unsubsidized employment, based on the performance of such
programs.
``(c) Effect of Failure To Meet Participation Rates.--
``(1) In general.--If a State reports that the State
has failed to achieve the participation rate required
by section 488 for the fiscal year, the Secretary may
make recommendations for changes in the State program
established under this part and (if the State has
established a program under part G) the State program
established under part G. The State may elect to follow
such recommendations, and shall demonstrate to the
Secretary how the State will achieve the required
participation rates.
``(2) Second consecutive failure.--Notwithstanding
paragraph (1), if the State has failed to achieve the
participation rates required by section 488 for 2
consecutive fiscal years, the Secretary may require the
State to make changes in the State program established
under this part and (if the State has established a
program under part G) the State program established
under part G.
``Part G--Workfare Program
``SEC. 490. ESTABLISHMENT AND OPERATION OF PROGRAM.
``(a) In General.--A State that establishes a work first
program under part F may establish and carry out a workfare
program that meets the requirements of this part, unless the
State has established a job placement voucher program under
part H.
``(b) Objective.--The objective of the workfare program is
for each program participant to find and hold a full-time
unsubsidized paid job, and for this goal to be achieved in a
cost-effective fashion.
``(c) Case Management Teams.--The State shall assign to each
program participant a case management team that shall meet with
the participant and assist the participant to choose the most
suitable workfare job under subsection (e), (f), or (g) and to
eventually obtain a full-time unsubsidized paid job.
``(d) Provision of Jobs.--The State shall provide each
participant in the program with a community service job that
meets the requirements of subsection (e) or a subsidized job
that meets the requirements of subsection (f) or (g).
``(e) Community Service Jobs.--
``(1) In general.--Except as provided in paragraphs
(2) and (3), each participant shall work for not fewer
than 30 hours per week (or, at the option of the State,
20 hours per week during fiscal years 1997 and 1998,
not fewer than 25 hours per week during fiscal year
1999, not fewer than 30 hours per week during fiscal
years 2000 and 2001, and not fewer than 35 hours per
week thereafter) in a community service job, and be
paid at a rate which is not greater than 75 percent
(or, at the option of the State, 100 percent) of the
maximum amount of assistance that may be provided under
the State plan approved under part A to a family of the
same size and composition with no income.
``(2) Exception.--(A) If the participant has obtained
unsubsidized part-time employment in the private
sector, the State shall provide the participant with a
part-time community service job.
``(B) If the State provides a participant a part-time
community service job under subparagraph (A), the State
shall ensure that the participant works for not fewer
than 30 hours per week.
``(3) Wages not considered earned income.--Wages paid
under a workfare program shall not be considered to be
earned income for purposes of any provision of law.
``(4) Community service job defined.--For purposes of
this section, the term `community service job' means--
``(A) a job provided to a participant by the
State administering the State plan under part
A; or
``(B) a job provided to a participant by any
other employer for which all or part of the
wages are paid by the State.
A State may provide or subsidize under the program any
job which the State determines to be appropriate.
``(f) Temporary Subsidized Job Creation.--A State that
establishes a workfare program under this part may establish a
program similar to the program operated by the State of Oregon,
which is known as `JOBS Plus'.
``(g) Work Supplementation Program.--
``(1) In general.--A State that establishes a
workfare program under this part may institute a work
supplementation program under which the State, to the
extent it considers appropriate, may reserve the sums
that would otherwise be payable to participants in the
program as a community service minimum wage and use the
sums instead for the purpose of providing and
subsidizing private sector jobs for the participants.
``(2) Employer agreement.--An employer who provides a
private sector job to a participant under paragraph (1)
shall agree to provide to the participant an amount in
wages equal to the poverty threshold for a family of
three.
``(h) Job Search Requirement.--The State shall require each
participant to spend a minimum of 5 hours per week on
activities related to securing unsubsidized full-time
employment in the private sector.
``(i) Duration of Participation.--
``(1) In general.--Except as provided in paragraph
(2), an individual may not participate for more than 2
years in a workfare program under this part.
``(2) Authority to allow repeated participation.--
``(A) In general.--Subject to subparagraph
(B), a State may allow an individual who, by
reason of paragraph (1), would be prohibited
from participating in the State program
established under this part to participate in
the program for such additional period or
periods as the State determines appropriate.
``(B) Limitation on percentage of repeat
participants.--
``(i) In general.--Except as provided
in clause (ii), the number of
individuals allowed under subparagraph
(A) to participate during a program
year in a State program established
under this part shall not exceed 10
percent of the total number of
individuals who participated in the
program during the immediately
preceding program year.
``(ii) Authority to increase
limitation.--
``(I) Petition.--A State may
request the Secretary to
increase the percentage
limitation imposed by clause
(i) to not more than 15
percent.
``(II) Authority to grant
request.--The Secretary may
approve a request made pursuant
to subclause (I) if the
Secretary deems it appropriate.
The Secretary shall develop
recommendations on the criteria
that should be applied in
evaluating requests under
subclause (I).
``(j) Use of Placement Companies.--A State that establishes a
workfare program under this part may enter into contracts with
private companies (whether operated for profit or not for
profit) for the placement of participants in the program in
positions of full-time employment, preferably in the private
sector, for wages sufficient to eliminate the need of such
participants for cash assistance in accordance with section
483.
``(k) Maximum of 3 Community Service Jobs.--A program
participant may not receive more than 3 community service jobs
under the program.
``Part H--Job Placement Voucher Program
``SEC. 490A. JOB PLACEMENT VOUCHER PROGRAM.
``A State that is not operating a workfare program under part
G may establish a job placement voucher program that meets the
following requirements:
``(1) The program shall offer each program
participant a voucher which the participant may use to
obtain employment in the private sector.
``(2) An employer who receives a voucher issued under
the program from an individual may redeem the voucher
at any time after the individual has been employed by
the employer for 6 months, unless another employee of
the employer was displaced by the employment of the
individual.
``(3) Upon presentation of a voucher by an employer
to the State agency responsible for the administration
of the program, the State agency shall pay to the
employer an amount equal to 50 percent of the total
amount of assistance provided under the State plan
approved under part A to the family of which the
individual is a member for the most recent 12 months
for which the family was eligible for such
assistance.''.
(c) Funding.--Section 413(a), as added by section 9101(a) of
this Act, is amended--
(1) by striking ``Subject to'' and inserting the
following:
``(1) In general.--Subject to''; and
(2) by inserting after and below the end the
following:
``(2) Work first and other programs.--(A) Each State
that is operating a program in accordance with a plan
approved under part F and a program in accordance with
part G or H shall be entitled to payments under
paragraph (3) for any fiscal year in an amount equal to
the sum of the applicable percentages (specified in
such paragraph) of its expenditures to carry out such
programs (subject to limitations prescribed by or
pursuant to such parts or this part on expenditures
that may be included for purposes of determining
payment under paragraph (3)), but such payments for any
fiscal year in the case of any State may not exceed the
limitation determined under subparagraph (B) with
respect to the State.
``(B) The limitation determined under this
subparagraph with respect to a State for any fiscal
year is the amount that bears the same ratio to the
amount specified in subparagraph (C) for such fiscal
year as the average monthly number of adult recipients
(as defined in subparagraph (D)) in the State in the
preceding fiscal year bears to the average monthly
number of such recipients in all the States for such
preceding year.
``(C)(i) The amount specified in this subparagraph
is--
``(I) $1,600,000,000 for fiscal year 1997;
``(II) $1,600,000,000 for fiscal year 1998;
``(III) $1,900,000,000 for fiscal year 1999;
``(IV) $2,500,000,000 for fiscal year 2000;
and
``(V) $3,200,000,000 for fiscal year 2001;
and
``(VI) $4,700,000,000 for fiscal year 2002;
and
``(VII) the amount determined under clause
(ii) for fiscal year 2003 and each succeeding
fiscal year.
``(ii) The amount determined under this clause for a
fiscal year is the product of the following:
``(I) The amount specified in this
subparagraph for the immediately preceding
fiscal year.
``(II) 1.00 plus the percentage (if any) by
which--
``(aa) the average of the Consumer
Price Index (as defined in section
1(f)(5) of the Internal Revenue Code of
1986) for the most recent 12-month
period for which such information is
available; exceeds
``(bb) the average of the Consumer
Price Index (as so defined) for the 12-
month period ending on June 30 of the
2nd preceding fiscal year.
``(III) The amount that bears the same ratio
to the amount specified in this subparagraph
for the immediately preceding fiscal year as
the number of individuals whom the Secretary
estimates will participate in programs operated
under part F, G, or H during the fiscal year
bears to the total number of individuals who
participated in such programs during such
preceding fiscal year.
``(D) For purposes of this paragraph, the term `adult
recipient' in the case of any State means an individual
other than a dependent child (unless such child is the
custodial parent of another dependent child) whose
needs are met (in whole or in part) with assistance
provided under the State plan approved under this part.
``(E) For purposes of subparagraph (D), the term
`dependent child' means a needy child (i) who has been
deprived of parental support or care by reason of the
death, continued absence from the home (other than
absence occasioned solely by reason of the performance
of active duty in the uniformed services of the United
States), or physical or mental incapacity of a parent,
and who is living with his father, mother, grandfather,
grandmother, brother, sister, stepfather, stepmother,
stepbrother, stepsister, uncle, aunt, first cousin,
nephew, or niece, in a place of residence maintained by
one or more of such relatives as his or their own home,
and (ii) who is (I) under the age of eighteen, or (II)
at the option of the State, under the age of nineteen
and a full-time student in a secondary school (or in
the equivalent level of vocational or technical
training), if, before he attains age nineteen, he may
reasonably be expected to complete the program of such
secondary school (or such training).
``(F) For purposes of subparagraph (E), the term
`relative with whom any dependent child is living'
means the individual who is one of the relatives
specified in subparagraph (E) and with whom such child
is living (within the meaning of such subsection) in a
place of residence maintained by such individual
(himself or together with any one or more of the other
relatives so specified) as his (or their) own home.
``(3)(A) In lieu of any payment under paragraph (1)
therefor, the Secretary shall pay to each State that is
operating a program in accordance with a plan approved
under part F and a program in accordance with part G or
H, with respect to expenditures by the State to carry
out such programs, an amount equal to--
``(i) with respect to so much of such
expenditures in a fiscal year as do not exceed
the State's expenditures in the fiscal year
1987 with respect to which payments were made
to such State from its allotment for such
fiscal year pursuant to part C of this title as
then in effect, 90 percent; and
``(ii) with respect to so much of such
expenditures in a fiscal year as exceed the
amount described in clause (i)--
``(I) 50 percent, in the case of
expenditures for administrative costs
made by a State in operating such
programs for such fiscal year (other
than the personnel costs for staff
employed full-time in the operation of
such program) and the costs of
transportation and other work-related
supportive services; and
``(II) 60 percent or the Federal
medical assistance percentage (as
defined in the last sentence of section
1118), whichever is the greater, in the
case of expenditures made by a State in
operating such programs for such fiscal
year (other than for costs described in
subclause (I)).
``(B) With respect to the amount for which payment is
made to a State under subparagraph (A)(i), the State's
expenditures for the costs of operating such programs
may be in cash or in kind, fairly evaluated.
``(C) Not more than 10 percent of the amount payable
to a State under this paragraph for a quarter may be
for expenditures made during the quarter with respect
to program participants who are not eligible for
assistance under the State plan approved under this
part.''.
(d) Secretary's Special Adjustment Fund.--Section 413(a), as
added by section 9101(a) of this Act, is amended by adding at
the end the following:
``(4) Secretary's special adjustment fund.--(A) There
shall be available to the Secretary from the amount
appropriated for payments under paragraph (2) for
States' programs under parts F and G for fiscal year
1996, $300,000,000 for special adjustments to States'
limitations on Federal payments for such programs.
``(B) A State may, not later than March 1 and
September 1 of each fiscal year, submit to the
Secretary a request to adjust the limitation on
payments under this section with respect to its program
under part F (and, in fiscal years after 1997) its
program under part G for the following fiscal year. The
Secretary shall only consider such a request from a
State which has, or which demonstrates convincingly on
the basis of estimates that it will, submit allowable
claims for Federal payment in the full amount available
to it under paragraph (2) in the current fiscal year
and obligated 95 percent of its full amount in the
prior fiscal year. The Secretary shall by regulation
prescribe criteria for the equitable allocation among
the States of Federal payments pursuant to adjustments
of the limitations referred to in the preceding
sentence in the case where the requests of all States
that the Secretary finds reasonable exceed the amount
available, and, within 30 days following the dates
specified in this paragraph, will notify each State
whether one or more of its limitations will be adjusted
in accordance with the State's request and the amount
of the adjustment (which may be some or all of the
amount requested).
``(C) The Secretary may adjust the limitation on
Federal payments to a State for a fiscal year under
paragraph (2), and upon a determination by the
Secretary that (and the amount by which) a State's
limitation should be raised, the amount specified in
such paragraph shall be considered to be so increased
for the following fiscal year.
``(D) The amount made available under subparagraph
(A) for special adjustments shall remain available to
the Secretary until expended. That amount shall be
reduced by the sum of the adjustments approved by the
Secretary in any fiscal year, and the amount shall be
increased in a fiscal year by the amount by which all
States' limitations under paragraph (2) of this
subsection and section 2008 for a fiscal year exceeded
the sum of the Federal payments under such provisons of
law for such fiscal year, but for fiscal years after
1997, such amount at the end of such fiscal year shall
not exceed $400,000,000.''.
(e) Conforming Amendments.--
(1) Section 1115(b)(2)(A) (42 U.S.C. 1315(b)(2)(A))
is amended by striking ``, and 402(a)(19) (relating to
the work incentive program)''.
(2) Section 1108 (42 U.S.C. 1308) is amended--
(A) in subsection (a), by striking ``or, in
the case of part A of title IV, section
403(k)''; and
(B) in subsection (d), by striking
``(exclusive of any amounts on account of
services and items to which, in the case of
part A of such title, section 403(k)
applies)''.
(3) Section 1902(a)(10)(A)(i)(I) (42 U.S.C.
1396a(a)(19)(A)(i)(I)) is amended--
(A) by striking ``402(a)(37), 406(h), or'';
and
(B) by striking ``482(e)(6)'' and inserting
``486(f)''.
(4) Section 1928(a)(1) (42 U.S.C. 1396s(a)(1)) is
amended by striking ``482(e)(6)'' and inserting
``486(f)''.
(f) Intent of the Congress.--The Congress intends for State
activities under section 484 of the Social Security Act (as
added by the amendment made by section 9301(a) of this Act) to
emphasize the use of the funds that would otherwise be used to
provide individuals with assistance under part A of title IV of
the Social Security Act and with food stamp benefits under the
Food Stamp Act of 1977, to subsidize the wages of such
individuals in temporary jobs.
(g) Sense of the Congress.--It is the sense of the Congress
that States should target individuals who have not attained 25
years of age for participation in the program established by
the State under part F of title IV of the Social Security Act
(as added by the amendment made by section 9301(a) of this
section) in order to break the cycle of welfare dependency.
SEC. 9302. REGULATIONS.
The Secretary of Health and Human Services shall prescribe
such regulations as may be necessary to implement the
amendments made by this subtitle.
SEC. 9303. APPLICABILITY TO STATES.
(a) State Option to Accelerate Applicability.--If a State
formally notifies the Secretary of Health and Human Services
that the State desires to accelerate the applicability to the
State of the amendments made by this subtitle, the amendments
shall apply to the State on and after such earlier date as the
State may select.
(b) State Option to Delay Applicability Until Waivers
Expire.--The amendments made by this subtitle shall not apply
to a State with respect to which there is in effect a waiver
issued under section 1115 of the Social Security Act for the
State program established under part F of title IV of such Act,
until the waiver expires, if the State formally notifies the
Secretary of Health and Human Services that the State desires
to so delay such effective date.
(c) Authority of the Secretary of Health and Human Services
to Delay Applicability to a State.--If a State formally
notifies the Secretary of Health and Human Services that the
State desires to delay the applicability to the State of the
amendments made by this title, the amendments shall apply to
the State on and after any later date agreed upon by the
Secretary and the State.
Subtitle D--Family Responsibility And Improved Child Support
Enforcement
CHAPTER 1--ELIGIBILITY AND OTHER MATTERS CONCERNING TITLE IV-D PROGRAM
CLIENTS
SEC. 9401. STATE OBLIGATION TO PROVIDE PATERNITY ESTABLISHMENT AND
CHILD SUPPORT ENFORCEMENT SERVICES.
(a) State Law Requirements.--Section 466(a) (42 U.S.C.
666(a)) is amended by inserting after paragraph (11) the
following:
``(12) Use of central case registry and centralized
collections unit.--Procedures under which--
``(A) every child support order established
or modified in the State on or after October 1,
1998, is recorded in the central case registry
established in accordance with section 454A(e);
and
``(B) child support payments are collected
through the centralized collections unit
established in accordance with section 454B--
``(i) on and after October 1, 1998,
under each order subject to wage
withholding under section 466(b); and
``(ii) on and after October 1, 1999,
under each other order required to be
recorded in such central case registry
under this paragraph or section
454A(e), except as provided in
subparagraph (C); and
``(C)(i) parties subject to a child support
order described in subparagraph (B)(ii) may opt
out of the procedure for payment of support
through the centralized collections unit (but
not the procedure for inclusion in the central
case registry) by filing with the State agency
a written agreement, signed by both parties, to
an alternative payment procedure; and
``(ii) an agreement described in clause (i)
becomes void whenever either party advises the
State agency of an intent to vacate the
agreement.''.
(b) State Plan Requirements.--Section 454 (42 U.S.C. 654) is
amended--
(1) by striking paragraph (4) and inserting the
following:
``(4) provide that such State will undertake--
``(A) to provide appropriate services under
this part to--
``(i) each child with respect to whom
an assignment is effective under
section 403(b)(1)(E)(i), 471(a)(17), or
1912 (except in cases where the State
agency determines, in accordance with
paragraph (25), that it is against the
best interests of the child to do so);
and
``(ii) each child not described in
clause (i)--
``(I) with respect to whom an
individual applies for such
services; and
``(II) (on and after October
1, 1998) each child with
respect to whom a support order
is recorded in the central
State case registry established
under section 454A, regardless
of whether application is made
for services under this part;
and
``(B) to enforce the support obligation
established with respect to the custodial
parent of a child described in subparagraph (A)
unless the parties to the order which
establishes the support obligation have opted,
in accordance with section 466(a)(12)(C), for
an alternative payment procedure.''; and
(2) in paragraph (6)--
(A) by striking subparagraph (A) and
inserting the following:
``(A) services under the State plan shall be
made available to nonresidents on the same
terms as to residents;'';
(B) in subparagraph (B)--
(i) by inserting ``on individuals not
receiving assistance under part A''
after ``such services shall be
imposed''; and
(ii) by inserting ``but no fees or
costs shall be imposed on any absent or
custodial parent or other individual
for inclusion in the central State
registry maintained pursuant to section
454A(e)''; and
(C) in each of subparagraphs (B), (C), and
(D)--
(i) by indenting such subparagraph
and aligning its left margin with the
left margin of subparagraph (A); and
(ii) by striking the final comma and
inserting a semicolon.
(c) Conforming Amendments.--
(1) Section 452(g)(2)(A) (42 U.S.C. 652(g)(2)(A)) is
amended by striking ``454(6)'' each place it appears
and inserting ``454(4)(A)(ii)''.
(2) Section 454(23) (42 U.S.C. 654(23)) is amended,
effective October 1, 1998, by striking ``information as
to any application fees for such services and''.
(3) Section 466(a)(3)(B) (42 U.S.C. 666(a)(3)(B)) is
amended by striking ``in the case of overdue support
which a State has agreed to collect under section
454(6)'' and inserting ``in any other case''.
(4) Section 466(e) (42 U.S.C. 666(e)) is amended by
striking ``or (6)''.
SEC. 9402. DISTRIBUTION OF PAYMENTS.
(a) Distributions Through State Child Support Enforcement
Agency to Former Assistance Recipients.--Section 454(5) (42
U.S.C. 654(5)) is amended--
(1) in subparagraph (A)--
(A) by striking ``section 402(a)(26) is
effective,'' and inserting ``section
403(b)(1)(E)(i) is effective, except as
otherwise specifically provided in section 464
or 466(a)(3),''; and
(B) by striking ``except that'' and all that
follows through the semicolon; and
(2) in subparagraph (B), by striking ``, except'' and
all that follows through ``medical assistance''.
(b) Distribution to a Family Currently Receiving Temporary
Employment Assistance.--Section 457 (42 U.S.C. 657) is
amended--
(1) by striking subsection (a) and redesignating
subsection (b) as subsection (a);
(2) in subsection (a) (as so redesignated)--
(A) in the matter preceding paragraph (2), to
read as follows:
``(a) In the Case of a Family Receiving TEA.--Amounts
collected under this part during any month as support of a
child who is receiving assistance under part A (or a parent or
caretaker relative of such a child) shall (except in the case
of a State exercising the option under subsection (b)) be
distributed as follows:
``(1) an amount equal to the amount that will be
disregarded pursuant to section 402(d)(2)(C) shall be
taken from each of--
``(A) the amounts received in a month which
represent payments for that month; and
``(B) the amounts received in a month which
represent payments for a prior month which were
made by the absent parent in that prior month;
and shall be paid to the family without affecting its
eligibility for assistance or decreasing any amount
otherwise payable as assistance to such family during
such month;'';
(B) in paragraph (4), by striking ``or (B)''
and all that follows through the period and
inserting ``; then (B) from any remainder,
amounts equal to arrearages of such support
obligations assigned, pursuant to part A, to
any other State or States shall be paid to such
other State or States and used to pay any such
arrearages (with appropriate reimbursement of
the Federal Government to the extent of its
participation in the financing); and then (C)
any remainder shall be paid to the family.'';
and
(3) by inserting after subsection (a) (as so
redesignated) the following new subsection:
``(b) Alternative Distribution in Case of Family Receiving
TEA.--In the case of a State electing the option under this
subsection, amounts collected as described in subsection (a)
shall be distributed as follows:
``(1) an amount equal to the amount that will be
disregarded pursuant to section 402(d)(2)(C) shall be
taken from each of--
``(A) the amounts received in a month which
represent payments for that month; and
``(B) the amounts received in a month which
represent payments for a prior month which were
made by the absent parent in that prior month;
and shall be paid to the family without affecting its
eligibility for assistance or decreasing any amount
otherwise payable as assistance to such family during
such month;
``(2) second, from any remainder, amounts equal to
the balance of support owed for the current month shall
be paid to the family;
``(3) third, from any remainder, amounts equal to
arrearages of such support obligations assigned,
pursuant to part A, to the State making the collection
shall be retained and used by such State to pay any
such arrearages (with appropriate reimbursement of the
Federal Government to the extent of its participation
in the financing);
``(4) fourth, from any remainder, amounts equal to
arrearages of such support obligations assigned,
pursuant to part A, to any other State or States shall
be paid to such other State or States and used to pay
any such arrearages (with appropriate reimbursement of
the Federal Government to the extent of its
participation in the financing); and
``(5) fifth, any remainder shall be paid to the
family.''.
(c) Distribution to a Family Not Receiving TEA.--Section
457(c) (42 U.S.C. 657(c)) is amended to read as follows:
``(c) Distributions in Case of Family Not Receiving TEA.--
Amounts collected by a State agency under this part during any
month as support of a child who is not receiving assistance
under part A (or of a parent or caretaker relative of such a
child) shall (subject to the remaining provisions of this
section) be distributed as follows:
``(1) first, amounts equal to the total of such
support owed for such month shall be paid to the
family;
``(2) second, from any remainder, amounts equal to
arrearages of such support obligations for months
during which such child did not receive assistance
under part A shall be paid to the family;
``(3) third, from any remainder, amounts equal to
arrearages of such support obligations assigned to the
State making the collection pursuant to part A shall be
retained and used by such State to pay any such
arrearages (with appropriate reimbursement of the
Federal Government to the extent of its participation
in the financing); and
``(4) fourth, from any remainder, amounts equal to
arrearages of such support obligations assigned to any
other State pursuant to part A shall be paid to such
other State or States, and used to pay such arrearages,
in the order in which such arrearages accrued (with
appropriate reimbursement of the Federal Government to
the extent of its participation in the financing).''.
(d) Distribution to a Child Receiving Assistance Under Title
IV-E.--Section 457(d) (42 U.S.C. 657(d)) is amended, in the
matter preceding paragraph (1), by striking ``Notwithstanding
the preceding provisions of this section, amounts'' and
inserting the following:
``(d) Distributions in Case of a Child Receiving Assistance
Under Title IV-E.--Amounts''.
(e) Regulations.--The Secretary of Health and Human Services
shall promulgate regulations under part A of title IV of the
Social Security Act, establishing standards applicable to
States electing the alternative formula under section 457(b) of
such Act for distribution of collections on behalf of families
receiving temporary employment assistance, designed to minimize
irregular monthly payments to such families.
(f) Clerical Amendments.--Section 454 (42 U.S.C. 654) is
amended--
(1) in paragraph (11)--
(A) by striking ``(11)'' and inserting
``(11)(A)''; and
(B) by inserting after the semicolon ``and'';
and
(2) by redesignating paragraph (12) as subparagraph
(B) of paragraph (11).
(g) Effective Dates.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall
become effective on October 1, 1996.
(2) Family not receiving tea.--The amendment made by
subsection (c) shall become effective on October 1,
1999.
(3) Special rules.--
(A) Applicability.--A State may elect to have
the amendments made by any subsection of this
section become effective only with respect to
child support cases beginning on or after the
effective date of such subsection.
(B) Delayed implementation.--A State may
elect to have the amendments made by this
section (other than subsection (c)) become
effective on a date later than October 1, 1996,
which date shall coincide with the operation of
the single statewide automated data processing
and information retrieval system required by
section 454A of the Social Security Act (as
added by section 9415(a)(2) of this Act) and
the State centralized collection unit required
by section 454B of the Social Security Act (as
added by section 9422(b) of this Act).
SEC. 9403. DUE PROCESS RIGHTS.
(a) In General.--Section 454 (42 U.S.C. 654), as amended by
section 9402(f) of this Act, is amended by inserting after
paragraph (11) the following new paragraph:
``(12) provide for procedures to ensure that--
``(A) individuals who are applying for or
receiving services under this part, or are
parties to cases in which services are being
provided under this part--
``(i) receive notice of all
proceedings in which support
obligations might be established or
modified; and
``(ii) receive a copy of any order
establishing or modifying a child
support obligation, or (in the case of
a petition for modification) a notice
of determination that there should be
no change in the amount of the child
support award, within 14 days after
issuance of such order or
determination;
``(B) individuals applying for or receiving
services under this part have access to a fair
hearing that meets standards established by the
Secretary and ensures prompt consideration and
resolution of complaints (but the resort to
such procedure shall not stay the enforcement
of any support order); and
``(C) individuals adversely affected by the
establishment or modification of (or, in the
case of a petition for modification, the
determination that there should be no change
in) a child support order shall be afforded not
less than 30 days after the receipt of the
order or determination to initiate proceedings
to challenge such order or determination;''.
(b) Effective Date.--The amendment made by subsection (a)
shall become effective on October 1, 1997.
SEC. 9404. PRIVACY SAFEGUARDS.
(a) State Plan Requirement.--Section 454 (42 U.S.C. 454) is
amended--
(1) by striking ``and'' at the end of paragraph (23);
(2) by striking the period at the end of paragraph
(24) and inserting ``; and''; and
(3) by adding after paragraph (24) the following:
``(25) will have in effect safeguards applicable to
all sensitive and confidential information handled by
the State agency designed to protect the privacy rights
of the parties, including--
``(A) safeguards against unauthorized use or
disclosure of information relating to
proceedings or actions to establish paternity,
or to establish or enforce support;
``(B) prohibitions on the release of
information on the whereabouts of one party to
another party against whom a protective order
with respect to the former party has been
entered; and
``(C) prohibitions on the release of
information on the whereabouts of one party to
another party if the State has reason to
believe that the release of the information may
result in physical or emotional harm to the
former party.''.
(b) Effective Date.--The amendment made by subsection (a)
shall become effective on October 1, 1997.
CHAPTER 2--PROGRAM ADMINISTRATION AND FUNDING
SEC. 9411. FEDERAL MATCHING PAYMENTS.
(a) Increased Base Matching Rate.--Section 455(a)(2) (42
U.S.C. 655(a)(2)) is amended to read as follows:
``(2) The applicable percent for a quarter for
purposes of paragraph (1)(A) is--
``(A) for fiscal year 1997, 69 percent,
``(B) for fiscal year 1998, 72 percent, and
``(C) for fiscal year 1999 and succeeding
fiscal years, 75 percent.''.
(b) Maintenance of Effort.--Section 455 (42 U.S.C. 655) is
amended--
(1) in subsection (a)(1), in the matter preceding
subparagraph (A), by striking ``From'' and inserting
``Subject to subsection (c), from''; and
(2) by inserting after subsection (b) the following
new subsection:
``(c) Maintenance of Effort.--Notwithstanding the provisions
of subsection (a), total expenditures for the State program
under this part for fiscal year 1997 and each succeeding fiscal
year, reduced by the percentage specified for such fiscal year
under subsection (a)(2)(A), (B), or (C)(i), shall not be less
than such total expenditures for fiscal year 1996, reduced by
66 percent.''.
SEC. 9412. PERFORMANCE-BASED INCENTIVES AND PENALTIES.
(a) Incentive Adjustments to Federal Matching Rate.--Section
458 (42 U.S.C. 658) is amended to read as follows:
``incentive adjustments to matching rate
``Sec. 458. (a) Incentive Adjustment.--(1) In General.--In
order to encourage and reward State child support enforcement
programs which perform in an effective manner, the Federal
matching rate for payments to a State under section
455(a)(1)(A), for each fiscal year beginning on or after
October 1, 1998, shall be increased by a factor reflecting the
sum of the applicable incentive adjustments (if any) determined
in accordance with regulations under this section with respect
to Statewide paternity establishment and to overall performance
in child support enforcement.
``(2) Standards.--(A) In General.--The Secretary shall
specify in regulations--
``(i) the levels of accomplishment, and rates of
improvement as alternatives to such levels, which
States must attain to qualify for incentive adjustments
under this section; and
``(ii) the amounts of incentive adjustment that shall
be awarded to States achieving specified accomplishment
or improvement levels, which amounts shall be
graduated, ranging up to--
``(I) 5 percentage points, in connection with
Statewide paternity establishment; and
``(II) 10 percentage points, in connection
with overall performance in child support
enforcement.
``(B) Limitation.--In setting performance standards pursuant
to subparagraph (A)(i) and adjustment amounts pursuant to
subparagraph (A)(ii), the Secretary shall ensure that the
aggregate number of percentage point increases as incentive
adjustments to all States do not exceed such aggregate
increases as assumed by the Secretary in estimates of the cost
of this section as of June 1995, unless the aggregate
performance of all States exceeds the projected aggregate
performance of all States in such cost estimates.
``(3) Determination of Incentive Adjustment.--The Secretary
shall determine the amount (if any) of incentive adjustment due
each State on the basis of the data submitted by the State
pursuant to section 454(15)(B) concerning the levels of
accomplishment (and rates of improvement) with respect to
performance indicators specified by the Secretary pursuant to
this section.
``(4) Fiscal Year Subject to Incentive Adjustment.--The total
percentage point increase determined pursuant to this section
with respect to a State program in a fiscal year shall apply as
an adjustment to the applicable percent under section 455(a)(2)
for payments to such State for the succeeding fiscal year.
``(5) Recycling of Incentive Adjustment.--A State shall
expend in the State program under this part all funds paid to
the State by the Federal Government as a result of an incentive
adjustment under this section.
``(b) Meaning of Terms.--For purposes of this section--
``(1) the term `Statewide paternity establishment
percentage' means, with respect to a fiscal year, the
ratio (expressed as a percentage) of--
``(A) the total number of out-of-wedlock
children in the State under one year of age for
whom paternity is established or acknowledged
during the fiscal year, to
``(B) the total number of children born out
of wedlock in the State during such fiscal
year; and
``(2) the term `overall performance in child support
enforcement' means a measure or measures of the
effectiveness of the State agency in a fiscal year
which takes into account factors including--
``(A) the percentage of cases requiring a
child support order in which such an order was
established;
``(B) the percentage of cases in which child
support is being paid;
``(C) the ratio of child support collected to
child support due; and
``(D) the cost-effectiveness of the State
program, as determined in accordance with
standards established by the Secretary in
regulations.''.
(b) Adjustment of Payments Under Part D of Title IV.--Section
455(a)(2) (42 U.S.C. 655(a)(2)), as amended by section 9411(a)
of this Act, is amended--
(1) by striking the period at the end of subparagraph
(C)(ii) and inserting a comma; and
(2) by adding after and below subparagraph (C), flush
with the left margin of the subsection, the following:
``increased by the incentive adjustment factor (if any)
determined by the Secretary pursuant to section 458.''.
(c) Conforming Amendments.--Section 454(22) (42 U.S.C.
654(22)) is amended--
(1) by striking ``incentive payments'' the first
place it appears and inserting ``incentive
adjustments''; and
(2) by striking ``any such incentive payments made to
the State for such period'' and inserting ``any
increases in Federal payments to the State resulting
from such incentive adjustments''.
(d) Calculation of IV-D Paternity Establishment Percentage.--
(1) Section 452(g)(1) (42 U.S.C. 652(g)(1)) is amended in the
matter preceding subparagraph (A) by inserting ``its overall
performance in child support enforcement is satisfactory (as
defined in section 458(b) and regulations of the Secretary),
and'' after ``1994,''.
(2) Section 452(g)(2) (42 U.S.C. 652(g)(2)) is amended--
(A) in subparagraph (A), in the matter preceding
clause (i)--
(i) by striking ``paternity establishment
percentage'' and inserting ``IV-D paternity
establishment percentage''; and
(ii) by striking ``(or all States, as the
case may be)'';
(B) in subparagraph (A)(i), by striking ``during the
fiscal year'';
(C) in subparagraph (A)(ii)(I), by striking ``as of
the end of the fiscal year'' and inserting ``in the
fiscal year or, at the option of the State, as of the
end of such year'';
(D) in subparagraph (A)(ii)(II), by striking ``or (E)
as of the end of the fiscal year'' and inserting ``in
the fiscal year or, at the option of the State, as of
the end of such year'';
(E) in subparagraph (A)(iii)--
(i) by striking ``during the fiscal year'';
and
(ii) by striking ``and'' at the end; and
(F) in the matter following subparagraph (A)--
(i) by striking ``who were born out of
wedlock during the immediately preceding fiscal
year'' and inserting ``born out of wedlock'';
(ii) by striking ``such preceding fiscal
year'' both places it appears and inserting
``the preceding fiscal year''; and
(iii) by striking ``or (E)'' the second place
it appears.
(3) Section 452(g)(3) (42 U.S.C. 652(g)(3)) is amended--
(A) by striking subparagraph (A) and redesignating
subparagraphs (B) and (C) as subparagraphs (A) and (B),
respectively;
(B) in subparagraph (A), as redesignated, by striking
``the percentage of children born out-of-wedlock in the
State'' and inserting ``the percentage of children in
the State who are born out of wedlock or for whom
support has not been established''; and
(C) in subparagraph (B), as redesignated--
(i) by inserting ``and overall performance in
child support enforcement'' after ``paternity
establishment percentages''; and
(ii) by inserting ``and securing support''
before the period.
(e) Reduction of Payments Under Part D of Title IV.--
(1) New requirements.--Section 455 (42 U.S.C. 655) is
amended by inserting after subsection (b) the
following:
``(c)(1) If the Secretary finds, with respect to a State
program under this part in a fiscal year beginning on or after
October 1, 1997--
``(A)(i) on the basis of data submitted by a State
pursuant to section 454(15)(B), that the State program
in such fiscal year failed to achieve the IV-D
paternity establishment percentage (as defined in
section 452(g)(2)(A)) or the appropriate level of
overall performance in child support enforcement (as
defined in section 458(b)(2)), or to meet other
performance measures that may be established by the
Secretary, or
``(ii) on the basis of an audit or audits of such
State data conducted pursuant to section 452(a)(4)(C),
that the State data submitted pursuant to section
454(15)(B) is incomplete or unreliable; and
``(B) that, with respect to the succeeding fiscal
year--
``(i) the State failed to take sufficient
corrective action to achieve the appropriate
performance levels as described in subparagraph
(A)(i) of this paragraph, or
``(ii) the data submitted by the State
pursuant to section 454(15)(B) is incomplete or
unreliable,
the amounts otherwise payable to the State under this part for
quarters following the end of such succeeding fiscal year,
prior to quarters following the end of the first quarter
throughout which the State program is in compliance with such
performance requirement, shall be reduced by the percentage
specified in paragraph (2).
``(2) The reductions required under paragraph (1) shall be--
``(A) not less than 6 nor more than 8 percent, or
``(B) not less than 8 nor more than 12 percent, if
the finding is the second consecutive finding made
pursuant to paragraph (1), or
``(C) not less than 12 nor more than 15 percent, if
the finding is the third or a subsequent consecutive
such finding.
``(3) For purposes of this subsection, section 405(d), and
section 452(a)(4), a State which is determined as a result of
an audit to have submitted incomplete or unreliable data
pursuant to section 454(15)(B), shall be determined to have
submitted adequate data if the Secretary determines that the
extent of the incompleteness or unreliability of the data is of
a technical nature which does not adversely affect the
determination of the level of the State's performance.''.
(2) Conforming amendments.--
(A) Section 452(a)(4) (42 U.S.C. 652(a)(4))
is amended by striking ``403(h)'' each place
such term appears and inserting ``455(c)''.
(B) Subsections (d)(3)(A), (g)(1), and
(g)(3)(A) of section 452 (42 U.S.C. 652) are
each amended by striking ``403(h)'' and
inserting ``455(c)''.
(f) Effective Dates.--
(1) Incentive adjustments.--(A) The amendments made
by subsections (a), (b), and (c) shall become effective
October 1, 1997, except to the extent provided in
subparagraph (B).
(B) Section 458 of the Social Security Act, as in
effect prior to the enactment of this section, shall be
effective for purposes of incentive payments to States
for fiscal years prior to fiscal year 1999.
(2) Penalty reductions.--(A) The amendments made by
subsection (d) shall become effective with respect to
calendar quarters beginning on and after the date of
enactment of this Act.
(B) The amendments made by subsection (e) shall
become effective with respect to calendar quarters
beginning on and after the date one year after the date
of enactment of this Act.
SEC. 9413. FEDERAL AND STATE REVIEWS AND AUDITS.
(a) State Agency Activities.--Section 454 (42 U.S.C. 654) is
amended--
(1) in paragraph (14), by striking ``(14)'' and
inserting ``(14)(A)'';
(2) by redesignating paragraph (15) as subparagraph
(B) of paragraph (14); and
(3) by inserting after paragraph (14) the following
new paragraph:
``(15) provide for--
``(A) a process for annual reviews of and
reports to the Secretary on the State program
under this part, which shall include such
information as may be necessary to measure
State compliance with Federal requirements for
expedited procedures and timely case
processing, using such standards and procedures
as are required by the Secretary, under which
the State agency will determine the extent to
which such program is in conformity with
applicable requirements with respect to the
operation of State programs under this part
(including the status of complaints filed under
the procedure required under paragraph
(12)(B)); and
``(B) a process of extracting from the State
automated data processing system and
transmitting to the Secretary data and
calculations concerning the levels of
accomplishment (and rates of improvement) with
respect to applicable performance indicators
(including IV-D paternity establishment
percentages and overall performance in child
support enforcement) to the extent necessary
for purposes of sections 452(g) and 458.''.
(b) Federal Activities.--Section 452(a)(4) (42 U.S.C.
652(a)(4)) is amended to read as follows:
``(4)(A) review data and calculations transmitted by
State agencies pursuant to section 454(15)(B) on State
program accomplishments with respect to performance
indicators for purposes of section 452(g) and 458, and
determine the amount (if any) of penalty reductions
pursuant to section 455(c) to be applied to the State;
``(B) review annual reports by State agencies
pursuant to section 454(15)(A) on State program
conformity with Federal requirements; evaluate any
elements of a State program in which significant
deficiencies are indicated by such report on the status
of complaints under the State procedure under section
454(12)(B); and, as appropriate, provide to the State
agency comments, recommendations for additional or
alternative corrective actions, and technical
assistance; and
``(C) conduct audits, in accordance with the
government auditing standards of the United States
Comptroller General--
``(i) at least once every 3 years (or more
frequently, in the case of a State which fails
to meet requirements of this part, or of
regulations implementing such requirements,
concerning performance standards and
reliability of program data) to assess the
completeness, reliability, and security of the
data, and the accuracy of the reporting
systems, used for the calculations of
performance indicators specified in subsection
(g) and section 458;
``(ii) of the adequacy of financial
management of the State program, including
assessments of--
``(I) whether Federal and other funds
made available to carry out the State
program under this part are being
appropriately expended, and are
properly and fully accounted for; and
``(II) whether collections and
disbursements of support payments and
program income are carried out
correctly and are properly and fully
accounted for; and
``(iii) for such other purposes as the
Secretary may find necessary;''.
(c) Effective Date.--The amendments made by this section
shall be effective with respect to calendar quarters beginning
on or after the date one year after enactment of this section.
SEC. 9414. REQUIRED REPORTING PROCEDURES.
(a) Establishment.--Section 452(a)(5) (42 U.S.C. 652(a)(5))
is amended by inserting ``, and establish procedures to be
followed by States for collecting and reporting information
required to be provided under this part, and establish uniform
definitions (including those necessary to enable the
measurement of State compliance with the requirements of this
part relating to expedited processes and timely case
processing) to be applied in following such procedures'' before
the semicolon.
(b) State Plan Requirement.--Section 454 (42 U.S.C. 654), as
amended by section 9404(a) of this Act, is amended--
(1) by striking ``and'' at the end of paragraph (24);
(2) by striking the period at the end of paragraph
(25) and inserting ``; and''; and
(3) by adding after paragraph (25) the following:
``(26) provide that the State shall use the
definitions established under section 452(a)(5) in
collecting and reporting information as required under
this part.''.
SEC. 9415. AUTOMATED DATA PROCESSING REQUIREMENTS.
(a) Revised Requirements.--(1) Section 454(16) (42 U.S.C.
654(16)) is amended--
(A) by striking ``, at the option of the State,'';
(B) by inserting ``and operation by the State
agency'' after ``for the establishment'';
(C) by inserting ``meeting the requirements of
section 454A'' after ``information retrieval system'';
(D) by striking ``in the State and localities
thereof, so as (A)'' and inserting ``so as'';
(E) by striking ``(i)''; and
(F) by striking ``(including'' and all that follows
and inserting a semicolon.
(2) Part D of title IV (42 U.S.C. 651-669) is amended by
inserting after section 454 the following new section:
``automated data processing
``Sec. 454A. (a) In General.--In order to meet the
requirements of this section, for purposes of the requirement
of section 454(16), a State agency shall have in operation a
single statewide automated data processing and information
retrieval system which has the capability to perform the tasks
specified in this section, and performs such tasks with the
frequency and in the manner specified in this part or in
regulations or guidelines of the Secretary.
``(b) Program Management.--The automated system required
under this section shall perform such functions as the
Secretary may specify relating to management of the program
under this part, including--
``(1) controlling and accounting for use of Federal,
State, and local funds to carry out such program; and
``(2) maintaining the data necessary to meet Federal
reporting requirements on a timely basis.
``(c) Calculation of Performance Indicators.--In order to
enable the Secretary to determine the incentive and penalty
adjustments required by sections 452(g) and 458, the State
agency shall--
``(1) use the automated system--
``(A) to maintain the requisite data on State
performance with respect to paternity
establishment and child support enforcement in
the State; and
``(B) to calculate the IV-D paternity
establishment percentage and overall
performance in child support enforcement for
the State for each fiscal year; and
``(2) have in place systems controls to ensure the
completeness, and reliability of, and ready access to,
the data described in paragraph (1)(A), and the
accuracy of the calculations described in paragraph
(1)(B).
``(d) Information Integrity and Security.--The State agency
shall have in effect safeguards on the integrity, accuracy, and
completeness of, access to, and use of data in the automated
system required under this section, which shall include the
following (in addition to such other safeguards as the
Secretary specifies in regulations):
``(1) Policies restricting access.--Written policies
concerning access to data by State agency personnel,
and sharing of data with other persons, which--
``(A) permit access to and use of data only
to the extent necessary to carry out program
responsibilities;
``(B) specify the data which may be used for
particular program purposes, and the personnel
permitted access to such data; and
``(C) ensure that data obtained or disclosed
for a limited program purpose is not used or
redisclosed for another, impermissible purpose.
``(2) Systems controls.--Systems controls (such as
passwords or blocking of fields) to ensure strict
adherence to the policies specified under paragraph
(1).
``(3) Monitoring of access.--Routine monitoring of
access to and use of the automated system, through
methods such as audit trails and feedback mechanisms,
to guard against and promptly identify unauthorized
access or use.
``(4) Training and information.--The State agency
shall have in effect procedures to ensure that all
personnel (including State and local agency staff and
contractors) who may have access to or be required to
use sensitive or confidential program data are fully
informed of applicable requirements and penalties, and
are adequately trained in security procedures.
``(5) Penalties.--The State agency shall have in
effect administrative penalties (up to and including
dismissal from employment) for unauthorized access to,
or disclosure or use of, confidential data.''.
(3) Regulations.--Section 452 (42 U.S.C. 652) is amended by
adding at the end the following:
``(j) The Secretary shall prescribe final regulations for
implementation of the requirements of section 454A not later
than 2 years after the date of the enactment of this
subsection.''.
(4) Implementation Timetable.--Section 454(24) (42 U.S.C.
654(24)), as amended by sections 9404(a)(2) and 9414(b)(1) of
this Act, is amended to read as follows:
``(24) provide that the State will have in effect an
automated data processing and information retrieval
system--
``(A) by October 1, 1995, meeting all
requirements of this part which were enacted on
or before the date of enactment of the Family
Support Act of 1988; and
``(B) by October 1, 1999, meeting all
requirements of this part enacted on or before
the date of enactment of the Omnibus Budget
Reconciliation Act of 1995 (but this provision
shall not be construed to alter earlier
deadlines specified for elements of such
system), except that such deadline shall be
extended by 1 day for each day (if any) by
which the Secretary fails to meet the deadline
imposed by section 452(j) of this Act;''.
(b) Special Federal Matching Rate for Development Costs of
Automated Systems.--Section 455(a) (42 U.S.C. 655(a)) is
amended--
(1) in paragraph (1)(B)--
(A) by striking ``90 percent'' and inserting
``the percent specified in paragraph (3)'';
(B) by striking ``so much of''; and
(C) by striking ``which the Secretary'' and
all that follows and inserting ``, and''; and
(2) by adding at the end the following new paragraph:
``(3)(A) The Secretary shall pay to each State, for each
quarter in fiscal year 1996, 90 percent of so much of State
expenditures described in subparagraph (1)(B) as the Secretary
finds are for a system meeting the requirements specified in
section 454(16), or meeting such requirements without regard to
clause (D) thereof.
``(B)(i) The Secretary shall pay to each State, for each
quarter in fiscal years 1997 through 2001, the percentage
specified in clause (ii) of so much of State expenditures
described in subparagraph (1)(B) as the Secretary finds are for
a system meeting the requirements specified in sections 454(16)
and 454A, subject to clause (iii).
``(ii) The percentage specified in this clause, for purposes
of clause (i), is the higher of--
``(I) 80 percent, or
``(II) the percentage otherwise applicable to Federal
payments to the State under subparagraph (A) (as
adjusted pursuant to section 458).''.
(c) Conforming Amendment.--Section 123(c) of the Family
Support Act of 1988 (102 Stat. 2352; Public Law 100-485) is
repealed.
(d) Additional Provisions.--For additional provisions of
section 454A, as added by subsection (a) of this section, see
the amendments made by sections 9421, 9422(c), and 9433(d) of
this Act.
SEC. 9416. DIRECTOR OF CSE PROGRAM; STAFFING STUDY.
(a) Reporting to Secretary.--Section 452(a) (42 U.S.C.
652(a)) is amended in the matter preceding paragraph (1) by
striking ``directly''.
(b) Staffing Studies.--
(1) Scope.--The Secretary of Health and Human
Services shall, directly or by contract, conduct
studies of the staffing of each State child support
enforcement program under part D of title IV of the
Social Security Act. Such studies shall include a
review of the staffing needs created by requirements
for automated data processing, maintenance of a central
case registry and centralized collections of child
support, and of changes in these needs resulting from
changes in such requirements. Such studies shall
examine and report on effective staffing practices used
by the States and on recommended staffing procedures.
(2) Frequency of studies.--The Secretary shall
complete the first staffing study required under
paragraph (1) by October 1, 1997, and may conduct
additional studies subsequently at appropriate
intervals.
(3) Report to the congress.--The Secretary shall
submit a report to the Congress stating the findings
and conclusions of each study conducted under this
subsection.
SEC. 9417. FUNDING FOR SECRETARIAL ASSISTANCE TO STATE PROGRAMS.
Section 452 (42 U.S.C. 652), as amended by section 9415(a)(3)
of this Act, is amended by adding at the end the following new
subsection:
``(k) Funding for Federal Activities Assisting State
Programs.--(1) There shall be available to the Secretary, from
amounts appropriated for fiscal year 1996 and each succeeding
fiscal year for payments to States under this part, the amount
specified in paragraph (2) for the costs to the Secretary for--
``(A) information dissemination and technical
assistance to States, training of State and Federal
staff, staffing studies, and related activities needed
to improve programs (including technical assistance
concerning State automated systems);
``(B) research, demonstration, and special projects
of regional or national significance relating to the
operation of State programs under this part; and
``(C) operation of the Federal Parent Locator Service
under section 453, to the extent such costs are not
recovered through user fees.
``(2) The amount specified in this paragraph for a fiscal
year is the amount equal to a percentage of the reduction in
Federal payments to States under part A on account of child
support (including arrearages) collected in the preceding
fiscal year on behalf of children receiving assistance under
State plans approved under part A in such preceding fiscal year
(as determined on the basis of the most recent reliable data
available to the Secretary as of the end of the third calendar
quarter following the end of such preceding fiscal year), equal
to--
``(A) 1 percent, for the activities specified in
subparagraphs (A) and (B) of paragraph (1); and
``(B) 2 percent, for the activities specified in
subparagraph (C) of paragraph (1).''.
SEC. 9418. REPORTS AND DATA COLLECTION BY THE SECRETARY.
(a) Annual Report to Congress.--(1) Section 452(a)(10)(A) (42
U.S.C. 652(a)(10)(A)) is amended--
(A) by striking ``this part;'' and inserting ``this
part, including--''; and
(B) by adding at the end the following indented
clauses:
``(i) the total amount of child
support payments collected as a result
of services furnished during such
fiscal year to individuals receiving
services under this part;
``(ii) the cost to the States and to
the Federal Government of furnishing
such services to those individuals; and
``(iii) the number of cases involving
families--
``(I) who became ineligible
for assistance under a State
plan approved under part A
during a month in such fiscal
year; and
``(II) with respect to whom a
child support payment was
received in the same month;''.
(2) Section 452(a)(10)(C) (42 U.S.C. 652(a)(10)(C)) is
amended--
(A) in the matter preceding clause (i)--
(i) by striking ``with the data required
under each clause being separately stated for
cases'' and inserting ``separately stated for
(1) cases'';
(ii) by striking ``cases where the child was
formerly receiving'' and inserting ``or
formerly received'';
(iii) by inserting ``or 1912'' after
``471(a)(17)''; and
(iv) by inserting ``(2)'' before ``all
other'';
(B) in each of clauses (i) and (ii), by striking ``,
and the total amount of such obligations'';
(C) in clause (iii), by striking ``described in'' and
all that follows and inserting ``in which support was
collected during the fiscal year;'';
(D) by striking clause (iv); and
(E) by redesignating clause (v) as clause (vii), and
inserting after clause (iii) the following new clauses:
``(iv) the total amount of support
collected during such fiscal year and
distributed as current support;
``(v) the total amount of support
collected during such fiscal year and
distributed as arrearages;
``(vi) the total amount of support
due and unpaid for all fiscal years;
and''.
(3) Section 452(a)(10)(G) (42 U.S.C. 652(a)(10)(G)) is
amended by striking ``on the use of Federal courts and''.
(4) Section 452(a)(10) (42 U.S.C. 652(a)(10)) is amended by
striking all that follows subparagraph (I).
(b) Data Collection and Reporting.--Section 469 (42 U.S.C.
669) is amended--
(1) by striking subsections (a) and (b) and inserting
the following:
``(a) The Secretary shall collect and maintain, on a fiscal
year basis, up-to-date statistics, by State, with respect to
services to establish paternity and services to establish child
support obligations, the data specified in subsection (b),
separately stated, in the case of each such service, with
respect to--
``(1) families (or dependent children) receiving
assistance under State plans approved under part A (or
E); and
``(2) families not receiving such assistance.
``(b) The data referred to in subsection (a) are--
``(1) the number of cases in the caseload of the
State agency administering the plan under this part in
which such service is needed; and
``(2) the number of such cases in which the service
has been provided.''; and
(2) in subsection (c), by striking ``(a)(2)'' and
inserting ``(b)(2)''.
(c) Effective Date.--The amendments made by this section
shall be effective with respect to fiscal year 1996 and
succeeding fiscal years.
CHAPTER 3--LOCATE AND CASE TRACKING
SEC. 9421. CENTRAL STATE AND CASE REGISTRY.
Section 454A, as added by section 9415(a)(2) of this Act, is
amended by adding at the end the following:
``(e) Central Case Registry.--(1) In General.--The automated
system required under this section shall perform the functions,
in accordance with the provisions of this subsection, of a
single central registry containing records with respect to each
case in which services are being provided by the State agency
(including, on and after October 1, 1998, each order specified
in section 466(a)(12)), using such standardized data elements
(such as names, social security numbers or other uniform
identification numbers, dates of birth, and case identification
numbers), and containing such other information (such as
information on case status) as the Secretary may require.
``(2) Payment Records.--Each case record in the central
registry shall include a record of--
``(A) the amount of monthly (or other periodic)
support owed under the support order, and other amounts
due or overdue (including arrears, interest or late
payment penalties, and fees);
``(B) the date on which or circumstances under which
the support obligation will terminate under such order;
``(C) all child support and related amounts collected
(including such amounts as fees, late payment
penalties, and interest on arrearages);
``(D) the distribution of such amounts collected; and
``(E) the birth date of the child for whom the child
support order is entered.
``(3) Updating and Monitoring.--The State agency shall
promptly establish and maintain, and regularly monitor, case
records in the registry required by this subsection, on the
basis of--
``(A) information on administrative actions and
administrative and judicial proceedings and orders
relating to paternity and support;
``(B) information obtained from matches with Federal,
State, or local data sources;
``(C) information on support collections and
distributions; and
``(D) any other relevant information.
``(f) Data Matches and Other Disclosures of Information.--The
automated system required under this section shall have the
capacity, and be used by the State agency, to extract data at
such times, and in such standardized format or formats, as may
be required by the Secretary, and to share and match data with,
and receive data from, other data bases and data matching
services, in order to obtain (or provide) information necessary
to enable the State agency (or Secretary or other State or
Federal agencies) to carry out responsibilities under this
part. Data matching activities of the State agency shall
include at least the following:
``(1) Data bank of child support orders.--Furnish to
the Data Bank of Child Support Orders established under
section 453(h) (and update as necessary, with
information including notice of expiration of orders)
minimal information (to be specified by the Secretary)
on each child support case in the central case
registry.
``(2) Federal parent locator service.--Exchange data
with the Federal Parent Locator Service for the
purposes specified in section 453.
``(3) Temporary employment assistance program and
medicaid agencies.--Exchange data with State agencies
(of the State and of other States) administering the
programs under part A and title XIX, as necessary for
the performance of State agency responsibilities under
this part and under such programs.
``(4) Intra- and interstate data matches.--Exchange
data with other agencies of the State, agencies of
other States, and interstate information networks, as
necessary and appropriate to carry out (or assist other
States to carry out) the purposes of this part.''.
SEC. 9422. CENTRALIZED COLLECTION AND DISBURSEMENT OF SUPPORT PAYMENTS.
(a) State Plan Requirement.--Section 454 (42 U.S.C. 654), as
amended by sections 9404(a) and 9414(b) of this Act, is
amended--
(1) by striking ``and'' at the end of paragraph (25);
(2) by striking the period at the end of paragraph
(26) and inserting ``; and''; and
(3) by adding after paragraph (26) the following new
paragraph:
``(27) provide that the State agency, on and after
October 1, 1998--
``(A) will operate a centralized, automated unit for
the collection and disbursement of child support under
orders being enforced under this part, in accordance
with section 454B; and
``(B) will have sufficient State staff (consisting of
State employees), and (at State option) contractors
reporting directly to the State agency to monitor and
enforce support collections through such centralized
unit, including carrying out the automated data
processing responsibilities specified in section
454A(g) and to impose, as appropriatein particular
cases, the administrative enforcement remedies specified in section
466(c)(1).''.
(b) Establishment of Centralized Collection Unit.--Part D of
title IV (42 U.S.C. 651-669) is amended by adding after section
454A the following new section:
``centralized collection and disbursement of support payments
``Sec. 454B. (a) In General.--In order to meet the
requirement of section 454(27), the State agency must operate a
single centralized, automated unit for the collection and
disbursement of support payments, coordinated with the
automated data system required under section 454A, in
accordance with the provisions of this section, which shall
be--
``(1) operated directly by the State agency (or by
two or more State agencies under a regional cooperative
agreement), or by a single contractor responsible
directly to the State agency; and
``(2) used for the collection and disbursement
(including interstate collection and disbursement) of
payments under support orders in all cases being
enforced by the State pursuant to section 454(4).
``(b) Required Procedures.--The centralized collections unit
shall use automated procedures, electronic processes, and
computer-driven technology to the maximum extent feasible,
efficient, and economical, for the collection and disbursement
of support payments, including procedures--
``(1) for receipt of payments from parents,
employers, and other States, and for disbursements to
custodial parents and other obligees, the State agency,
and the State agencies of other States;
``(2) for accurate identification of payments;
``(3) to ensure prompt disbursement of the custodial
parent's share of any payment; and
``(4) to furnish to either parent, upon request,
timely information on the current status of support
payments.''.
(c) Use of Automated System.--Section 454A, as added by
section 9415(a)(2) of this Act and as amended by section 9421
of this Act, is amended by adding at the end the following new
subsection:
``(g) Centralized Collection and Distribution of Support
Payments.--The automated system required under this section
shall be used, to the maximum extent feasible, to assist and
facilitate collections and disbursement of support payments
through the centralized collections unit operated pursuant to
section 454B, through the performance of functions including at
a minimum--
``(1) generation of orders and notices to employers
(and other debtors) for the withholding of wages (and
other income)--
``(A) within two working days after receipt
(from the directory of New Hires established
under section 453(i) or any other source) of
notice of and the income source subject to such
withholding; and
``(B) using uniform formats directed by the
Secretary;
``(2) ongoing monitoring to promptly identify
failures to make timely payment; and
``(3) automatic use of enforcement mechanisms
(including mechanisms authorized pursuant to section
466(c)) where payments are not timely made.''.
(d) Effective Date.--The amendments made by this section
shall become effective on October 1, 1998.
SEC. 9423. AMENDMENTS CONCERNING INCOME WITHHOLDING.
(a) Mandatory Income Withholding.--(1) Section 466(a)(1) (42
U.S.C. 666(a)(1)) is amended to read as follows:
``(1) Income withholding.--(A) Under orders enforced
under the state plan.--Procedures described in
subsection (b) for the withholding from income of
amounts payable as support in cases subject to
enforcement under the State plan.
``(B) Under certain orders predating change in
requirement.--Procedures under which all child support
orders issued (or modified) before October 1, 1996, and
which are not otherwise subject to withholding under
subsection (b), shall become subject to withholding
from wages as provided in subsection (b) if arrearages
occur, without the need for a judicial or
administrative hearing.''.
(2) Section 466(a)(8) (42 U.S.C. 666(a)(8)) is repealed.
(3) Section 466(b) (42 U.S.C. 666(b)) is amended--
(A) in the matter preceding paragraph (1), by
striking ``subsection (a)(1)'' and inserting
``subsection (a)(1)(A)'';
(B) in paragraph (5), by striking all that follows
``administered by'' and inserting ``the State through
the centralized collections unit established pursuant
to section 454B, in accordance with the requirements of
such section 454B.'';
(C) in paragraph (6)(A)(i)--
(i) by inserting ``, in accordance with
timetables established by the Secretary,''
after ``must be required''; and
(ii) by striking ``to the appropriate
agency'' and all that follows and inserting
``to the State centralized collections unit
within 5 working days after the date such
amount would (but for this subsection) have
been paid or credited to the employee, for
distribution in accordance with this part.'';
(D) in paragraph (6)(A)(ii), by inserting ``be in a
standard format prescribed by the Secretary, and''
after ``shall''; and
(E) in paragraph (6)(D)--
(i) by striking ``employer who discharges''
and inserting ``employer who--(A) discharges'';
(ii) by relocating subparagraph (A), as
designated, as an indented subparagraph after
and below the introductory matter;
(iii) by striking the period at the end; and
(iv) by adding after and below subparagraph
(A) the following new subparagraph:
``(B) fails to withhold support from wages,
or to pay such amounts to the State centralized
collections unit in accordance with this
subsection.''.
(b) Conforming Amendment.--Section 466(c) (42 U.S.C. 666(c))
is repealed.
(c) Definition of Terms.--The Secretary shall promulgate
regulations providing definitions, for purposes of part D of
title IV of the Social Security Act, for the term ``income''
and for such other terms relating to income withholding under
section 466(b) of such Act as the Secretary may find it
necessary or advisable to define.
SEC. 9424. LOCATOR INFORMATION FROM INTERSTATE NETWORKS.
Section 466(a) (42 U.S.C. 666(a)), as amended by section
9423(a)(2) of this Act, is amended by inserting after paragraph
(7) the following:
``(8) Locator information from interstate networks.--
Procedures ensuring that the State will neither provide
funding for, nor use for any purpose (including any
purpose unrelated to the purposes of this part), any
automated interstate network or system used to locate
individuals--
``(A) for purposes relating to the use of
motor vehicles; or
``(B) providing information for law
enforcement purposes (where child support
enforcement agencies are otherwise allowed
access by State and Federal law),
unless all Federal and State agencies administering
programs under this part (including the entities
established under section 453) have access to
information in such system or network to the same
extent as any other user of such system or network.''.
SEC. 9425. EXPANDED FEDERAL PARENT LOCATOR SERVICE.
(a) Expanded Authority to Locate Individuals and Assets.--
Section 453 (42 U.S.C. 653) is amended--
(1) in subsection (a), by striking all that follows
``subsection (c))'' and inserting the following:
``, for the purpose of establishing parentage, establishing,
setting the amount of, modifying, or enforcing child support
obligations--
``(1) information on, or facilitating the discovery
of, the location of any individual--
``(A) who is under an obligation to pay child
support;
``(B) against whom such an obligation is
sought; or
``(C) to whom such an obligation is owed,
including such individual's social security
number (or numbers), most recent residential
address, and the name, address, and employer
identification number of such individual's
employer; and
``(2) information on the individual's wages (or other
income) from, and benefits of, employment (including
rights to or enrollment in group health care coverage);
and
``(3) information on the type, status, location, and
amount of any assets of, or debts owed by or to, any
such individual.''; and
(2) in subsection (b)--
(A) in the matter preceding paragraph (1), by
striking ``social security'' and all that
follows through ``absent parent'' and inserting
``information specified in subsection (a)'';
and
(B) in paragraph (2), by inserting before the
period ``, or from any consumer reporting
agency (as defined in section 603(f) of the
Fair Credit Reporting Act (15 U.S.C.
1681a(f))'';
(3) in subsection (e)(1), by inserting before the
period ``, or by consumer reporting agencies''.
(b) Reimbursement for Data From Federal Agencies.--Section
453(e)(2) (42 U.S.C. 653(e)(2)) is amended in the fourth
sentence by inserting before the period ``in an amount which
the Secretary determines to be reasonable payment for the data
exchange (which amount shall not include payment for the costs
of obtaining, compiling, or maintaining the data)''.
(c) Access to Consumer Reports Under Fair Credit Reporting
Act.--(1) Section 608 of the Fair Credit Reporting Act (15
U.S.C. 1681f) is amended--
(A) by striking ``, limited to'' and inserting ``to a
governmental agency (including the entire consumer
report, in the case of a Federal, State, or local
agency administering a program under part D of title IV
of the Social Security Act, and limited to''; and
(B) by striking ``employment, to a governmental
agency'' and inserting ``employment, in the case of any
other governmental agency)''.
(2) Reimbursement for Reports by State Agencies and Credit
Bureaus.--Section 453 (42 U.S.C. 653) is amended by adding at
the end the following new subsection:
``(g) The Secretary is authorized to reimburse costs to State
agencies and consumer credit reporting agencies the costs
incurred by such entities in furnishing information requested
by the Secretary pursuant to this section in an amount which
the Secretary determines to be reasonable payment for the data
exchange (which amount shall not include payment for the costs
of obtaining, compiling, or maintaining the data).''.
(d) Disclosure of Tax Return Information.--(1) Section
6103(1)(6)(A)(ii) of the Internal Revenue Code of 1986 is
amended by striking ``, but only if'' and all that follows and
inserting a period.
(2) Section 6103(1)(8)(A) of the Internal Revenue Code of
1986 is amended by inserting ``Federal,'' before ``State or
local''.
(e) Technical Amendments.--
(1) Sections 452(a)(9), 453(a), 453(b), 463(a), and
463(e) (42 U.S.C. 652(a)(9), 653(a), 653(b), 663(a),
and 663(e)) are each amended by inserting ``Federal''
before ``Parent'' each place it appears.
(2) Section 453 (42 U.S.C. 653) is amended in the
heading by adding ``federal'' before ``parent''.
(f) New Components.--Section 453 (42 U.S.C. 653), as amended
by subsection (c)(2) of this section, is amended by adding at
the end the following:
``(h) Data Bank of Child Support Orders.--
``(1) In general.--Not later than October 1, 1998, In
order to assist States in administering their State
plans under this part and parts A, F, and G, and for
the other purposes specified in this section, the
Secretary shall establish and maintain in the Federal
Parent Locator Service an automated registry to be
known as the Data Bank of Child Support Orders, which
shall contain abstracts of child support orders and
other information described in paragraph (2) on each
case in each State central case registry maintained
pursuant to section 454A(e), as furnished (and
regularly updated), pursuant to section 454A(f), by
State agencies administering programs under this part.
``(2) Case information.--The information referred to
in paragraph (1), as specified by the Secretary, shall
include sufficient information (including names, social
security numbers or other uniform identification
numbers, and State case identification numbers) to
identify the individuals who owe or are owed support
(or with respect to or on behalf of whom support
obligations are sought to be established), and the
State or States which have established or modified, or
are enforcing or seeking to establish, such an order.
``(i) Directory of New Hires.--
``(1) In general.--Not later than October 1, 1998, In
order to assist States in administering their State
plans under this part and parts A, F, and G, and for
the other purposes specified in this section, the
Secretary shall establish and maintain in the Federal
Parent Locator Service an automated directory to be
known as the directory of New Hires, containing--
``(A) information supplied by employers on
each newly hired individual, in accordance with
paragraph (2); and
``(B) information supplied by State agencies
administering State unemployment compensation
laws, in accordance with paragraph (3).
``(2) Employer information.--
``(A) Information required.--Subject to
subparagraph (D), each employer shall furnish
to the Secretary, for inclusion in the
directory established under this subsection,
not later than 10 days after the date (on or
after October 1, 1998) on which the employer
hires a new employee (as defined in
subparagraph (C)), a report containing the
name, date of birth, and social security number
of such employee, and the employer
identification number of the employer.
``(B) Reporting method and format.--The
Secretary shall provide for transmission of the
reports required under subparagraph (A) using
formats and methods which minimize the burden
on employers, which shall include--
``(i) automated or electronic
transmission of such reports;
``(ii) transmission by regular mail;
and
``(iii) transmission of a copy of the
form required for purposes of
compliance with section 3402 of the
Internal Revenue Code of 1986.
``(C) Employee defined.--For purposes of this
paragraph, the term `employee' means any
individual subject to the requirement of
section 3402(f)(2) of the Internal Revenue Code
of 1986.
``(D) Paperwork reduction requirement.--As
required by the information resources
management policies published by the Director
of the Office of Management and Budget pursuant
to section 3504(b)(1) of title 44, United
States Code, the Secretary, in order to
minimize the cost and reporting burden on
employers, shall not require reporting pursuant
to this paragraph if an alternative reporting
mechanism can be developed that either relies
on existing Federal or State reporting or
enables the Secretary to collect the needed
information in a more cost-effective and
equally expeditious manner, taking into account
the reporting costs on employers.
``(E) Civil money penalty on noncomplying
employers.--(i) Any employer that fails to make
a timely report in accordance with this
paragraph with respect to an individual shall
be subject to a civil money penalty, for each
calendar year in which the failure occurs, of
the lesser of $500 or 1 percent of the wages or
other compensation paid by such employer to
such individual during such calendar year.
``(ii) Subject to clause (iii), the
provisions of section 1128A (other than
subsections (a) and (b) thereof) shall apply to
a civil money penalty under clause (i) in the
same manner as they apply to a civil money
penalty or proceeding under section 1128A(a).
``(iii) Any employer with respect to whom a
penalty under this subparagraph is upheld after
an administrative hearing shall be liable to
pay all costs of the Secretary with respect to
such hearing.
``(3) Employment security information.--
``(A) Reporting requirement.--Each State
agency administering a State unemployment
compensation law approved by the Secretary of
Labor under the Federal Unemployment Tax Act
shall furnish to the Secretary of Health and
Human Services extracts of the reports to the
Secretary of Labor concerning the wages and
unemployment compensation paid to individuals
required under section 303(a)(6), in accordance
with subparagraph (B).
``(B) Manner of compliance.--The extracts
required under subparagraph (A) shall be
furnished to the Secretary of Health and Human
Services on a quarterly basis, with respect to
calendar quarters beginning on and after
October 1, 1996, by such dates, in such format,
and containing such information as required by
that Secretary in regulations.
``(j) Data Matches and Other Disclosures.--
``(1) Verification by social security
administration.--(A) The Secretary shall transmit data
on individuals and employers maintained under this
section to the Social Security Administration to the
extent necessary for verification in accordance with
subparagraph (B).
``(B) The Social Security Administration shall verify
the accuracy of, correct or supply to the extent
necessary and feasible, and report to the Secretary,
the following information in data supplied by the
Secretary pursuant to subparagraph (A):
``(i) the name, social security number, and
birth date of each individual; and
``(ii) the employer identification number of
each employer.
``(2) Child support locator matches.--For the purpose
of locating individuals for purposes of paternity
establishment and establishment and enforcement of
child support, the Secretary shall--
``(A) match data in the directory of New
Hires against the child support order abstracts
in the Data Bank of Child Support Orders not
less often than every 2 working days; and
``(B) report information obtained from such a
match to concerned State agencies operating
programs under this part not later than 2
working days after such match.
``(3) Data matches and disclosures of data in all
registries for title iv program purposes.--The
Secretary shall--
``(A) perform matches of data in each
component of the Federal Parent Locator Service
maintained under this section against data in
each other such component (other than the
matches required pursuant to paragraph (1)),
and report information resulting from such
matches to State agencies operating programs
under this part and parts A, F, and G; and
``(B) disclose data in such registries to
such State agencies,
to the extent, and with the frequency, that the
Secretary determines to be effective in assisting such
States to carry out their responsibilities under such
programs.
``(k) Fees.--
``(1) For ssa verification.--The Secretary shall
reimburse the Commissioner of Social Security, at a
rate negotiated between the Secretary and the
Commissioner, the costs incurred by the Commissioner in
performing the verification services specified in
subsection (j).
``(2) For information from sesas.--The Secretary
shall reimburse costs incurred by State employment
security agencies in furnishing data as required by
subsection (j)(3), at rates which the Secretary
determines to be reasonable (which rates shall not
include payment for the costs of obtaining, compiling,
or maintaining such data).
``(3) For information furnished to state and federal
agencies.--State and Federal agencies receiving data or
information from the Secretary pursuant to this section
shall reimburse the costs incurred by the Secretary in
furnishing such data or information, at rates which the
Secretary determines to be reasonable (which rates
shall include payment for the costs of obtaining,
verifying, maintaining, and matching such data or
information).
``(l) Restriction on Disclosure and Use.--Data in the Federal
Parent Locator Service, and information resulting from matches
using such data, shall not be used or disclosed except as
specifically provided in this section.
``(m) Retention of Data.--Data in the Federal Parent Locator
Service, and data resulting from matches performed pursuant to
this section, shall be retained for such period (determined by
the Secretary) as appropriate for the data uses specified in
this section.
``(n) Information Integrity and Security.--The Secretary
shall establish and implement safeguards with respect to the
entities established under this section designed to--
``(1) ensure the accuracy and completeness of
information in the Federal Parent Locator Service; and
``(2) restrict access to confidential information in
the Federal Parent Locator Service to authorized
persons, and restrict use of such information to
authorized purposes.
``(o) Limit on Liability.--The Secretary shall not be liable
to either a State or an individual for inaccurate information
provided to a component of the Federal Parent Locator Service
section and disclosed by the Secretary in accordance with this
section.''.
(g) Conforming Amendments.--
(1) To part d of title iv of the social security
act.--Section 454(8)(B) (42 U.S.C. 654(8)(B)) is
amended to read as follows:
``(B) the Federal Parent Locator Service
established under section 453;''.
(2) To federal unemployment tax act.--Section
3304(16) of the Internal Revenue Code of 1986 is
amended--
(A) by striking ``Secretary of Health,
Education, and Welfare'' each place such term
appears and inserting ``Secretary of Health and
Human Services'';
(B) in subparagraph (B), by striking ``such
information'' and all that follows and
inserting ``information furnished under
subparagraph (A) or (B) is used only for the
purposes authorized under such subparagraph;'';
(C) by striking ``and'' at the end of
subparagraph (A);
(D) by redesignating subparagraph (B) as
subparagraph (C); and
(E) by inserting after subparagraph (A) the
following new subparagraph:
``(B) wage and unemployment compensation
information contained in the records of such
agency shall be furnished to the Secretary of
Health and Human Services (in accordance with
regulations promulgated by such Secretary) as
necessary for the purposes of the directory of
New Hires established under section 453(i) of
the Social Security Act, and''.
(3) To state grant program under title iii of the
social security act.--Section 303(a) (42 U.S.C. 503(a))
is amended--
(A) by striking ``and'' at the end of
paragraph (8);
(B) by striking the period at the end of
paragraph (9) and inserting ``; and''; and
(C) by adding after paragraph (9) the
following new paragraph:
``(10) The making of quarterly electronic reports, at
such dates, in such format, and containing such
information, as required by the Secretary of Health and
Human Services under section 453(i)(3), and compliance
with such provisions as such Secretary may find
necessary to ensure the correctness and verification of
such reports.''.
SEC. 9426. USE OF SOCIAL SECURITY NUMBERS.
(a) State Law Requirement.--Section 466(a) (42 U.S.C.
666(a)), as amended by section 9401(a) of this Act, is amended
by inserting after paragraph (12) the following:
``(13) Social security numbers required.--Procedures
requiring the recording of social security numbers--
``(A) of both parties on marriage licenses
and divorce decrees; and
``(B) of both parents, on birth records and
child support and paternity orders.''.
(b) Clarification of Federal Policy.--Section
205(c)(2)(C)(ii) (42 U.S.C. 405(c)(2)(C)(ii)) is amended by
striking the third sentence and inserting ``This clause shall
not be considered to authorize disclosure of such numbers
except as provided in the preceding sentence.''.
CHAPTER 4--STREAMLINING AND UNIFORMITY OF PROCEDURES
SEC. 9431. ADOPTION OF UNIFORM STATE LAWS.
Section 466(a) (42 U.S.C. 666(a)), as amended by sections
9401(a) and 9426(a) of this Act, is amended inserting after
paragraph (13) the following:
``(14) Interstate enforcement.--(A) Adoption of
uifsa.--Procedures under which the State adopts in its
entirety (with the modifications and additions
specified in this paragraph) not later than January 1,
1997, and uses on and after such date, the Uniform
Interstate Family Support Act, as approved by the
National Conference of Commissioners on Uniform State
Laws in August, 1992.
``(B) Expanded application of uifsa.--The State law
adopted pursuant to subparagraph (A) shall be applied
to any case--
``(i) involving an order established or
modified in one State and for which a
subsequent modification is sought in another
State; or
``(ii) in which interstate activity is
required to enforce an order.
``(C) Jurisdiction to modify orders.--The State law
adopted pursuant to subparagraph (A) of this paragraph
shall contain the following provision in lieu of
section 611(a)(1) of the Uniform Interstate Family
Support Act described in such subparagraph (A):
`` `(1) the following requirements are met:
`` `(i) the child, the individual obligee,
and the obligor--
`` `(I) do not reside in the issuing
State; and
`` `(II) either reside in this State
or are subject to the jurisdiction of
this State pursuant to section 201; and
`` `(ii) (in any case where another State is
exercising or seeks to exercise jurisdiction to
modify the order) the conditions of section 204
are met to the same extent as required for
proceedings to establish orders; or'.
``(D) Service of process.--The State law adopted
pursuant to subparagraph (A) shall recognize as valid,
for purposes of any proceeding subject to such State
law, service of process upon persons in the State (and
proof of such service) by any means acceptable in
another State which is the initiating or responding
State in such proceeding.
``(E) Cooperation by employers.--The State law
adopted pursuant to subparagraph (A) shall provide for
the use of procedures (including sanctions for
noncompliance) under which all entities in the State
(including for-profit, nonprofit, and governmental
employers) are required to provide promptly, in
response to a request by the State agency of that or
any other State administering a program under this
part, information on the employment, compensation, and
benefits of any individual employed by such entity as
an employee or contractor.''.
SEC. 9432. IMPROVEMENTS TO FULL FAITH AND CREDIT FOR CHILD SUPPORT
ORDERS.
Section 1738B of title 28, United States Code, is amended--
(1) in subsection (a)(2), by striking ``subsection
(e)'' and inserting ``subsections (e), (f), and (i)'';
(2) in subsection (b), by inserting after the 2nd
undesignated paragraph the following:
`` `child's home State' means the State in which a
child lived with a parent or a person acting as parent
for at least six consecutive months immediately
preceding the time of filing of a petition or
comparable pleading for support and, if a child is less
than six months old, the State in which the child lived
from birth with any of them. A period of temporary
absence of any of them is counted as part of the six-
month period.'';
(3) in subsection (c), by inserting ``by a court of a
State'' before ``is made'';
(4) in subsection (c)(1), by inserting ``and
subsections (e), (f), and (g)'' after ``located'';
(5) in subsection (d)--
(A) by inserting ``individual'' before
``contestant''; and
(B) by striking ``subsection (e)'' and
inserting ``subsections (e) and (f)'';
(6) in subsection (e), by striking ``make a
modification of a child support order with respect to a
child that is made'' and inserting ``modify a child
support order issued'';
(7) in subsection (e)(1), by inserting ``pursuant to
subsection (i)'' before the semicolon;
(8) in subsection (e)(2)--
(A) by inserting ``individual'' before
``contestant'' each place such term appears;
and
(B) by striking ``to that court's making the
modification and assuming'' and inserting
``with the State of continuing, exclusive
jurisdiction for a court of another State to
modify the order and assume'';
(9) by redesignating subsections (f) and (g) as
subsections (g) and (h), respectively;
(10) by inserting after subsection (e) the following:
``(f) Recognition of Child Support Orders.--If one or more
child support orders have been issued in this or another State
with regard to an obligor and a child, a court shall apply the
following rules in determining which order to recognize for
purposes of continuing, exclusive jurisdiction and enforcement:
``(1) If only one court has issued a child support
order, the order of that court must be recognized.
``(2) If two or more courts have issued child support
orders for the same obligor and child, and only one of
the courts would have continuing, exclusive
jurisdiction under this section, the order of that
court must be recognized.
``(3) If two or more courts have issued child support
orders for the same obligor and child, and only one of
the courts would have continuing, exclusive
jurisdiction under this section, an order issued by a
court in the current home State of the child must be
recognized, but if an order has not been issued in the
current home State of the child, the order most
recently issued must be recognized.
``(4) If two or more courts have issued child support
orders for the same obligor and child, and none of the
courts would have continuing, exclusive jurisdiction
under this section, a court may issue a child support
order, which must be recognized.
``(5) The court that has issued an order recognized
under this subsection is the court having continuing,
exclusive jurisdiction.'';
(11) in subsection (g) (as so redesignated)--
(A) by striking ``Prior'' and inserting
``Modified''; and
(B) by striking ``subsection (e)'' and
inserting ``subsections (e) and (f)'';
(12) in subsection (h) (as so redesignated)--
(A) in paragraph (2), by inserting
``including the duration of current payments
and other obligations of support'' before the
comma; and
(B) in paragraph (3), by inserting ``arrears
under'' after ``enforce''; and
(13) by adding at the end the following:
``(i) Registration for Modification.--If there is no
individual contestant or child residing in the issuing State,
the party or support enforcement agency seeking to modify, or
to modify and enforce, a child support order issued in another
State shall register that order in a State with jurisdiction
over the nonmovant for the purpose of modification.''.
SEC. 9433. STATE LAWS PROVIDING EXPEDITED PROCEDURES.
(a) State Law Requirements.--Section 466 (42 U.S.C. 666) is
amended--
(1) in subsection (a)(2), in the first sentence, to
read as follows: ``Expedited administrative and
judicial procedures (including the procedures specified
in subsection (c)) for establishing paternity and for
establishing, modifying, and enforcing support
obligations.''; and
(2) by adding after subsection (b) the following new
subsection:
``(c) Expedited Procedures.--The procedures specified in this
subsection are the following:
``(1) Administrative action by state agency.--
Procedures which give the State agency the authority
(and recognize and enforce the authority of State
agencies of other States), without the necessity of
obtaining an order from any other judicial or
administrative tribunal (but subject to due process
safeguards, including (as appropriate) requirements for
notice, opportunity to contest the action, and
opportunity for an appeal on the record to an
independent administrative or judicial tribunal), to
take the following actions relating to establishment or
enforcement of orders:
``(A) Genetic testing.--To order genetic
testing for the purpose of paternity
establishment as provided in section 466(a)(5).
``(B) Default orders.--To enter a default
order, upon a showing of service of process and
any additional showing required by State law--
``(i) establishing paternity, in the
case of any putative father who refuses
to submit to genetic testing; and
``(ii) establishing or modifying a
support obligation, in the case of a
parent (or other obligor or obligee)
who fails to respond to notice to
appear at a proceeding for such
purpose.
``(C) Subpoenas.--To subpoena any financial
or other information needed to establish,
modify, or enforce an order, and to sanction
failure to respond to any such subpoena.
``(D) Access to personal and financial
information.--To obtain access, subject to
safeguards on privacy and information security,
to the following records (including automated
access, in the case of records maintained in
automated data bases):
``(i) records of other State and
local government agencies, including--
``(I) vital statistics
(including records of marriage,
birth, and divorce);
``(II) State and local tax
and revenue records (including
information on residence
address, employer, income and
assets);
``(III) records concerning
real and titled personal
property;
``(IV) records of
occupational and professional
licenses, and records
concerning the ownership and
control of corporations,
partnerships, and other
business entities;
``(V) employment security
records;
``(VI) records of agencies
administering public assistance
programs;
``(VII) records of the motor
vehicle department; and
``(VIII) corrections records;
and
``(ii) certain records held by
private entities, including--
``(I) customer records of
public utilities and cable
television companies; and
``(II) information (including
information on assets and
liabilities) on individuals who
owe or are owed support (or
against or with respect to whom
a support obligation is sought)
held by financial institutions
(subject to limitations on
liability of such entities
arising from affording such
access).
``(E) Income withholding.--To order income
withholding in accordance with subsection
(a)(1) and (b) of section 466.
``(F) Change in payee.--(In cases where
support is subject to an assignment under
section 403(b)(1)(E)(i), 471(a)(17), or 1912,
or to a requirement to pay through the
centralized collections unit under section
454B) upon providing notice to obligor and
obligee, to direct the obligor or other payor
to change the payee to the appropriate
government entity.
``(G) Secure assets to satisfy arrearages.--
For the purpose of securing overdue support--
``(i) to intercept and seize any
periodic or lump-sum payment to the
obligor by or through a State or local
government agency, including--
``(I) unemployment
compensation, workers'
compensation, and other
benefits;
``(II) judgments and
settlements in cases under the
jurisdiction of the State or
local government; and
``(III) lottery winnings;
``(ii) to attach and seize assets of
the obligor held by financial
institutions;
``(iii) to attach public and private
retirement funds in appropriate cases,
as determined by the Secretary; and
``(iv) to impose liens in accordance
with paragraph (a)(4) and, in
appropriate cases, to force sale of
property and distribution of proceeds.
``(H) Increase monthly payments.--For the
purpose of securing overdue support, to
increase the amount of monthly support payments
to include amounts for arrearages (subject to
such conditions or restrictions as the State
may provide).
``(I) Suspension of drivers' licenses.--To
suspend drivers' licenses of individuals owing
past-due support, in accordance with subsection
(a)(16).
``(2) Substantive and procedural rules.--The
expedited procedures required under subsection (a)(2)
shall include the following rules and authority,
applicable with respect to all proceedings to establish
paternity or to establish, modify, or enforce support
orders:
``(A) Locator information; presumptions
concerning notice.--Procedures under which--
``(i) the parties to any paternity or
child support proceedings are required
(subject to privacy safeguards) to file
with the tribunal before entry of an
order, and to update as appropriate,
information on location and identity
(including Social Security number,
residential and mailing addresses,
telephone number, driver's license
number, and name, address, and
telephone number of employer); and
``(ii) in any subsequent child
support enforcement action between the
same parties, the tribunal shall be
authorized, upon sufficient showing
that diligent effort has been made to
ascertain such party's current
location, to deem due process
requirements for notice and service of
process to be met, with respect to such
party, by delivery to the most recent
residential or employer address so
filed pursuant to clause (i).
``(B) Statewide jurisdiction.--Procedures
under which--
``(i) the State agency and any
administrative or judicial tribunal
with authority to hear child support
and paternity cases exerts statewide
jurisdiction over the parties, and
orders issued in such cases have
statewide effect; and
``(ii) (in the case of a State in
which orders in such cases are issued
by local jurisdictions) a case may be
transferred between jurisdictions in
the State without need for any
additional filing by the petitioner, or
service of process upon the respondent,
to retain jurisdiction over the
parties.''.
(c) Exceptions From State Law Requirements.--Section 466(d)
(42 U.S.C. 666(d)) is amended--
(1) by striking ``(d) If'' and inserting the
following:
``(d) Exemptions From Requirements.--
``(1) In general.--Subject to paragraph (2), if'';
and
(2) by adding at the end the following new paragraph:
``(2) Nonexempt requirements.--The Secretary shall
not grant an exemption from the requirements of--
``(A) subsection (a)(5) (concerning
procedures for paternity establishment);
``(B) subsection (a)(10) (concerning
modification of orders);
``(C) subsection (a)(12) (concerning
recording of orders in the central State case
registry);
``(D) subsection (a)(13) (concerning
recording of Social Security numbers);
``(E) subsection (a)(14) (concerning
interstate enforcement); or
``(F) subsection (c) (concerning expedited
procedures), other than paragraph (1)(A)
thereof (concerning establishment or
modification of support amount).''.
(d) Automation of State Agency Functions.--Section 454A, as
added by section 9415(a)(2) of this Act and as amended by
sections 9421 and 9422(c) of this Act, is amended by adding at
the end the following new subsection:
``(h) Expedited Administrative Procedures.--The automated
system required under this section shall be used, to the
maximum extent feasible, to implement any expedited
administrative procedures required under section 466(c).''.
CHAPTER 5--PATERNITY ESTABLISHMENT
SEC. 9441. SENSE OF THE CONGRESS.
It is the sense of the Congress that social services should
be provided in hospitals to women who have become pregnant as a
result of rape or incest.
SEC. 9442. AVAILABILITY OF PARENTING SOCIAL SERVICES FOR NEW FATHERS.
Section 466(a) (42 U.S.C. 666(a)), as amended by sections
9401(a), 9426(a), and 9431 of this Act, is amended by inserting
after paragraph (14) the following:
``(15) Procedures for providing new fathers with
positive parenting counseling that stresses the
importance of paying child support in a timely manner,
in accordance with regulations prescribed by the
Secretary.''.
SEC. 9443. COOPERATION REQUIREMENT AND GOOD CAUSE EXCEPTION.
(a) In General.--Section 454 (42 U.S.C. 654) is amended--
(1) by striking ``and'' at the end of paragraph (23);
(2) by striking the period at the end of paragraph
(24) and inserting ``; and''; and
(3) by inserting after paragraph (24) the following:
``(25) provide that the State agency administering
the plan under this part--
``(A) will make the determination specified
under paragraph (4), as to whether an
individual is cooperating with efforts to
establish paternity and secure support (or has
good cause not to cooperate with such efforts)
for purposes of the requirements of sections
403(b)(1)(E)(i) and 1912;
``(B) will advise individuals, both orally
and in writing, of the grounds for good cause
exceptions to the requirement to cooperate with
such efforts;
``(C) will take the best interests of the
child into consideration in making the
determination whether such individual has good
cause not to cooperate with such efforts;
``(D)(i) will make the initial determination
as to whether an individual is cooperating (or
has good cause not to cooperate) with efforts
to establish paternity within 10 days after
such individual is referred to such State
agency by the State agency administering the
program under part A of title XIX;
``(ii) will make redeterminations as to
cooperation or good cause at appropriate
intervals; and
``(iii) will promptly notify the individual,
and the State agencies administering such
programs, of each such determination and
redetermination;
``(E) with respect to any child born on or
after the date 10 months after enactment of
this provision, will not determine (or
redetermine) the mother (or other custodial
relative) of such child to be cooperating with
efforts to establish paternity unless such
individual furnishes--
``(i) the name of the putative father
(or fathers); and
``(ii) sufficient additional
information to enable the State agency,
if reasonable efforts were made, to
verify the identity of the person named
as the putative father (including such
information as the putative father's
present address, telephone number, date
of birth, past or present place of
employment, school previously or
currently attended, and names and
addresses of parents, friends, or
relatives able to provide location
information, or other information that
could enable service of process on such
person), and
``(F)(i) (where a custodial parent who was
initially determined not to be cooperating (or
to have good cause not to cooperate) is later
determined to be cooperating or to have good
cause not to cooperate) will immediately notify
the State agencies administering the programs
under part A of title XIX that this eligibility
condition has been met; and
``(ii) (where a custodial parent was
initially determined to be cooperating (or to
have good cause not to cooperate)) will not
later determine such individual not to be
cooperating (or not to have good cause not to
cooperate) until such individual has been
afforded an opportunity for a hearing.''.
(b) Medicaid Amendments.--Section 1912(a) (42 U.S.C.
1396k(a)) is amended--
(1) in paragraph (1)(B), by inserting ``(except as
provided in paragraph (2))'' after ``to cooperate with
the State'';
(2) in subparagraphs (B) and (C) of paragraph (1) by
striking ``, unless'' and all that follows and
inserting a semicolon; and
(3) by redesignating paragraph (2) as paragraph (5),
and inserting after paragraph (1) the following new
paragraphs:
``(2) provide that the State agency will immediately
refer each applicant or recipient requiring paternity
establishment services to the State agency
administering the program under part D of title IV;
``(3) provide that an individual will not be required
to cooperate with the State, as provided under
paragraph (1), if the individual is found to have good
cause for refusing to cooperate, as determined in
accordance with standards prescribed by the Secretary,
which standards shall take into consideration the best
interests of the individuals involved--
``(A) to the satisfaction of the State agency
administering the program under part D, as
determined in accordance with section 454(25),
with respect to the requirements to cooperate
with efforts to establish paternity and to
obtain support (including medical support) from
a parent; and
``(B) to the satisfaction of the State agency
administering the program under this title,
with respect to other requirements to cooperate
under paragraph (1);
``(4) provide that (except as provided in paragraph
(5)) an applicant requiring paternity establishment
services (other than an individual presumptively
eligible pursuant to section 1920) shall not be
eligible for medical assistance under this title until
such applicant--
``(i) has furnished to the agency
administering the State plan under part D of
title IV the information specified in section
454(25)(E); or
``(ii) has been determined by such agency to
have good cause not to cooperate; and
``(5) provide that the provisions of paragraph (4)
shall not apply with respect to an applicant--
``(i) if such agency has not, within 10 days
after such individual was referred to such
agency, provided the notification required by
section 454(25)(D)(iii), until such
notification is received; and
``(ii) if such individual appeals a
determination that the individual lacks good
cause for noncooperation, until after such
determination is affirmed after notice and
opportunity for a hearing.''.
(c) Effective Date.--The amendments made by this section
shall be effective with respect to applications filed in or
after the first calendar quarter beginning 10 months or more
after the date of the enactment of this Act (or such earlier
quarter as the State may select) for assistance under a State
plan approved under part A of title IV of the Social Security
Act or for medical assistance under a State plan approved under
title XIX of such Act.
SEC. 9444. FEDERAL MATCHING PAYMENTS.
(a) Increased Base Matching Rate.--Section 455(a)(2) (42
U.S.C. 655(a)(2)) is amended to read as follows:
``(2) The applicable percent for a quarter for
purposes of paragraph (1)(A) is--
``(A) for fiscal year 1996, 69 percent;
``(B) for fiscal year 1997, 72 percent; and
``(C) for fiscal year 1998 and succeeding
fiscal years, 75 percent.''.
(b) Maintenance of Effort.--Section 455 (42 U.S.C. 655) is
amended--
(1) in subsection (a)(1), in the matter preceding
subparagraph (A), by striking ``From'' and inserting
``Subject to subsection (c), from''; and
(2) by inserting after subsection (b) the following:
``(c) Maintenance of Effort.--Notwithstanding subsection (a),
total expenditures for the State program under this part for
fiscal year 1996 and each succeeding fiscal year, reduced by
the percentage specified for such fiscal year under
subparagraph (A), (B), or (C)(i) of paragraph (2), shall not be
less than such total expenditures for fiscal year 1995, reduced
by 66 percent.''.
SEC. 9445. STATE LAWS CONCERNING PATERNITY ESTABLISHMENT.
(a) State Laws Required.--Section 466(a)(5) (42 U.S.C.
666(a)(5)) is amended--
(1) by striking ``(5)'' and inserting the following:
``(5) Procedures concerning paternity establish-
ment.--'';
(2) in subparagraph (A)--
(A) by striking ``(A)(i)'' and inserting the
following:
``(A) Establishment process available from
birth until age eighteen.--(i)''; and
(B) by indenting clauses (i) and (ii) so that
the left margin of such clauses is 2 ems to the
right of the left margin of paragraph (4);
(3) in subparagraph (B)--
(A) by striking ``(B)'' and inserting the
following:
``(B) Procedures concerning genetic
testing.--(i)'';
(B) in clause (i), as redesignated, by
inserting before the period ``, where such
request is supported by a sworn statement (I)
by such party alleging paternity setting forth
facts establishing a reasonable possibility of
the requisite sexual contact of the parties, or
(II) by such party denying paternity setting
forth facts establishing a reasonable
possibility of the nonexistence of sexual
contact of the parties;'';
(C) by inserting after and below clause (i)
(as redesignated) the following new clause:
``(ii) Procedures which require the State
agency, in any case in which such agency orders
genetic testing--
``(I) to pay costs of such tests,
subject to recoupment (where the State
so elects) from the putative father if
paternity is established; and
``(II) to obtain additional testing
in any case where an original test
result is disputed, upon request and
advance payment by the disputing
party.'';
(4) by striking subparagraphs (C) and (D) and
inserting the following:
``(C) Paternity acknowledgment.--(i)
Procedures for a simple civil process for
voluntarily acknowledging paternity under which
the State must provide that, before a mother
and a putative father can sign an
acknowledgment of paternity, the putative
father and the mother must be given notice,
orally, in writing, and in a language that each
can understand, of the alternatives to, the
legal consequences of, and the rights
(including, if 1 parent is a minor, any rights
afforded due to minority status) and
responsibilities that arise from, signing the
acknowledgment.
``(ii) Such procedures must include a
hospital-based program for the voluntary
acknowledgment of paternity focusing on the
period immediately before or after the birth of
a child.
``(iii) Such procedures must require the
State agency responsible for maintaining birth
records to offer voluntary paternity
establishment services.
``(iv) The Secretary shall prescribe
regulations governing voluntary paternity
establishment services offered by hospitals and
birth record agencies. The Secretary shall
prescribe regulations specifying the types of
other entities that may offer voluntary
paternity establishment services, and governing
the provision of such services, which shall
include a requirement that such an entity must
use the same notice provisions used by, the
same materials used by, provide the personnel
providing such services with the same training
provided by, and evaluate the provision of such
services in the same manner as, voluntary
paternity establishment programs of hospitals
and birth record agencies.
``(v) Such procedures must require the State
and those required to establish paternity to
use only the affidavit developed under section
452(a)(7) for the voluntary acknowledgment of
paternity, and to give full faith and credit to
such an affidavit signed in any other State.
``(D) Status of signed paternity
acknowledgment.--(i) Procedures under which a
signed acknowledgment of paternity is
considered a legal finding of paternity,
subject to the right of any signatory to
rescind the acknowledgment within 60 days.
``(ii)(I) Procedures under which, after the
60-day period referred to in clause (i), a
signed acknowledgment of paternity may be
challenged in court only on the basis of fraud,
duress, or material mistake of fact, with the
burden of proof upon the challenger, and under
which the legal responsibilities (including
child support obligations) of any signatory
arising from the acknowledgment may not be
suspended during the challenge, except for good
cause shown.
``(II) Procedures under which, after the 60-
day period referred to in clause (i), a minor
who signs an acknowledgment of paternity other
than in the presence of a parent or court-
appointed guardian ad litem may rescind the
acknowledgment in a judicial or administrative
proceeding, until the earlier of--
``(aa) attaining the age of majority;
or
``(bb) the date of the first judicial
or administrative proceeding brought
(after the signing) to establish a
child support obligation, visitation
rights, or custody rights with respect
to the child whose paternity is the
subject of the acknowledgment, and at
which the minor is represented by a
parent, guardian ad litem, or
attorney.'';
(5) by striking subparagraph (E) and inserting the
following:
``(E) Bar on acknowledgment ratification
proceedings.--Procedures under which no
judicial or administrative proceedings are
required or permitted to ratify an unchallenged
acknowledgment of paternity.'';
(6) by striking subparagraph (F) and inserting the
following:
``(F) Admissibility of genetic testing
results.--Procedures--
``(i) requiring that the State admit
into evidence, for purposes of
establishing paternity, results of any
genetic test that is--
``(I) of a type generally
acknowledged, by accreditation
bodies designated by the
Secretary, as reliable evidence
of paternity; and
``(II) performed by a
laboratory approved by such an
accreditation body;
``(ii) that any objection to genetic
testing results must be made in writing
not later than a specified number of
days before any hearing at which such
results may be introduced into evidence
(or, at State option, not later than a
specified number of days after receipt
of such results); and
``(iii) that, if no objection is
made, the test results are admissible
as evidence of paternity without the
need for foundation testimony or other
proof of authenticity or accuracy.'';
and
(7) by adding after subparagraph (H) the following
new subparagraphs:
``(I) No right to jury trial.--Procedures
providing that the parties to an action to
establish paternity are not entitled to jury
trial.
``(J) Temporary support order based on
probable paternity in contested cases.--
Procedures which require that a temporary order
be issued, upon motion by a party, requiring
the provision of child support pending an
administrative or judicial determination of
parentage, where there is clear and convincing
evidence of paternity (on the basis of genetic
tests or other evidence).
``(K) Proof of certain support and paternity
establishment costs.--Procedures under which
bills for pregnancy, childbirth, and genetic
testing are admissible as evidence without
requiring third-party foundation testimony, and
shall constitute prima facie evidence of
amounts incurred for such services and testing
on behalf of the child.
``(L) Waiver of state debts for
cooperation.--At the option of the State,
procedures under which the tribunal
establishing paternity and support has
discretion to waive rights to all or part of
amounts owed to the State (but not to the
mother) for costs related to pregnancy,
childbirth, and genetic testing and for public
assistance paid to the family where the father
cooperates or acknowledges paternity before or
after genetic testing.
``(M) Standing of putative fathers.--
Procedures ensuring that the putative father
has a reasonable opportunity to initiate a
paternity action.''.
(b) National Paternity Acknowledgment Affidavit.--Section
452(a)(7) (42 U.S.C. 652(a)(7)) is amended by inserting ``, and
develop an affidavit to be used for the voluntary
acknowledgment of paternity which shall include the social
security account number of each parent'' before the semicolon.
(c) Technical Amendment.--Section 468 (42 U.S.C. 668) is
amended by striking ``a simple civil process for voluntarily
acknowledging paternity and''.
SEC. 9446. OUTREACH FOR VOLUNTARY PATERNITY ESTABLISHMENT.
(a) State Plan Requirement.--Section 454(23) (42 U.S.C.
654(23)) is amended by adding at the end the following new
subparagraph:
``(C) publicize the availability and
encourage the use of procedures for voluntary
establishment of paternity and child support
through a variety of means, which--
``(i) include distribution of written
materials at health care facilities
(including hospitals and clinics), and
other locations such as schools;
``(ii) may include pre-natal programs
to educate expectant couples on
individual and joint rights and
responsibilities with respect to
paternity (and may require all
expectant recipients of assistance
under part A to participate in such
pre-natal programs, as an element of
cooperation with efforts to establish
paternity and child support);
``(iii) include, with respect to each
child discharged from a hospital after
birth for whom paternity or child
support has not been established,
reasonable follow-up efforts (including
at least one contact of each parent
whose whereabouts are known, except
where there is reason to believe such
follow-up efforts would put mother or
child at risk), providing--
``(I) in the case of a child
for whom paternity has not been
established, information on the
benefits of and procedures for
establishing paternity; and
``(II) in the case of a child
for whom paternity has been
established but child support
has not been established,
information on the benefits of
and procedures for establishing
a child support order, and an
application for child support
services;''.
(b) Enhanced Federal Matching.--Section 455(a)(1)(C) (42
U.S.C. 655(a)(1)(C)) is amended--
(1) by inserting ``(i)'' before ``laboratory costs'',
and
(2) by inserting before the semicolon ``, and (ii)
costs of outreach programs designed to encourage
voluntary acknowledgment of paternity''.
(c) Effective Dates.--(1) The amendments made by subsection
(a) shall become effective October 1, 1997.
(2) The amendments made by subsection (b) shall be effective
with respect to calendar quarters beginning on and after
October 1, 1996.
CHAPTER 6--ESTABLISHMENT AND MODIFICATION OF SUPPORT ORDERS
SEC. 9451. NATIONAL CHILD SUPPORT GUIDELINES COMMISSION.
(a) Establishment.--There is hereby established a commission
to be known as the ``National Child Support Guidelines
Commission'' (in this section referred to as the
``Commission'').
(b) General Duties.--The Commission shall develop a national
child support guideline for consideration by the Congress that
is based on a study of various guideline models, the benefits
and deficiencies of such models, and any needed improvements.
(c) Membership.--
(1) Number; appointment.--
(A) In general.--The Commission shall be
composed of 12 individuals appointed jointly by
the Secretary of Health and Human Services and
the Congress, not later than January 15, 1997,
of which--
(i) 2 shall be appointed by the
Chairman of the Committee on Finance of
the Senate, and 1 shall be appointed by
the ranking minority member of the
Committee;
(ii) 2 shall be appointed by the
Chairman of the Committee on Ways and
Means of the House of Representatives,
and 1 shall be appointed by the ranking
minority member of the Committee; and
(iii) 6 shall be appointed by the
Secretary of Health and Human Services.
(B) Qualifications of members.--Members of
the Commission shall have expertise and
experience in the evaluation and development of
child support guidelines. At least 1 member
shall represent advocacy groups for custodial
parents, at least 1 member shall represent
advocacy groups for noncustodial parents, and
at least 1 member shall be the director of a
State program under part D of title IV of the
Social Security Act.
(2) Terms of office.--Each member shall be appointed
for a term of 2 years. A vacancy in the Commission
shall be filled in the manner in which the original
appointment was made.
(d) Commission Powers, Compensation, Access to Information,
and Supervision.--The first sentence of subparagraph (C), the
first and third sentences of subparagraph (D), subparagraph (F)
(except with respect to the conduct of medical studies),
clauses (ii) and (iii) of subparagraph (G), and subparagraph
(H) of section 1886(e)(6) of the Social Security Act shall
apply to the Commission in the same manner in which such
provisions apply to the Prospective Payment Assessment
Commission.
(e) Report.--Not later than 2 years after the appointment of
members, the Commission shall submit to the President, the
Committee on Ways and Means of the House of Representatives,
and the Committee on Finance of the Senate, a recommended
national child support guideline and a final assessment of
issues relating to such a proposed national child support
guideline.
(f) Termination.--The Commission shall terminate 6 months
after the submission of the report described in subsection (e).
SEC. 9452. SIMPLIFIED PROCESS FOR REVIEW AND ADJUSTMENT OF CHILD
SUPPORT ORDERS.
(a) In General.--Section 466(a)(10) (42 U.S.C. 666(a)(10)) is
amended to read as follows:
``(10) Procedures for modification of support
orders.--
``(A)(i) Procedures under which--
``(I) every 3 years, at the request
of either parent subject to a child
support order, the State shall review
and, as appropriate, adjust the order
in accordance with the guidelines
established under section 467(a) if the
amount of the child support award under
the order differs from the amount that
would be awarded in accordance with
such guidelines, without a requirement
for any other change in circumstances;
and
``(II) upon request at any time of
either parent subject to a child
support order, the State shall review
and, as appropriate, adjust the order
in accordance with the guidelines
established under section 467(a) based
on a substantial change in the
circumstances of either such parent.
``(ii) Such procedures shall require both
parents subject to a child support order to be
notified of their rights and responsibilities
provided for under clause (i) at the time the
order is issued and in the annual information
exchange form provided under subparagraph (B).
``(B) Procedures under which each child
support order issued or modified in the State
after the effective date of this subparagraph
shall require the parents subject to the order
to provide each other with a complete statement
of their respective financial condition
annually on a form which shall be established
by the Secretary and provided by the State. The
Secretary shall establish regulations for the
enforcement of such exchange of information.''.
CHAPTER 7--ENFORCEMENT OF SUPPORT ORDERS
SEC. 9461. FEDERAL INCOME TAX REFUND OFFSET.
(a) Changed Order of Refund Distribution Under Internal
Revenue Code.--Section 6402(c) of the Internal Revenue Code of
1986 is amended by striking the 3rd sentence.
(b) Elimination of Disparities in Treatment of Assigned and
Non-Assigned Arrearages.--(1) Section 464(a) (42 U.S.C. 664(a))
is amended--
(A) by striking ``(a)'' and inserting ``(a) Offset
Authorized.--'';
(B) in paragraph (1)--
(i) in the first sentence, by striking
``which has been assigned to such State
pursuant to section 402(a)(26) or section
471(a)(17)''; and
(ii) in the second sentence, by striking ``in
accordance with section 457 (b)(4) or (d)(3)''
and inserting ``as provided in paragraph (2)'';
(C) in paragraph (2), to read as follows:
``(2) The State agency shall distribute amounts paid
by the Secretary of the Treasury pursuant to paragraph
(1)--
``(A) in accordance with section 457(a)(4) or
(d)(3), in the case of past-due support
assigned to a State pursuant to section
403(b)(1)(E)(i) or 471(a)(17); and
``(B) to or on behalf of the child to whom
the support was owed, in the case of past-due
support not so assigned.'';
(D) in paragraph (3)--
(i) by striking ``or (2)'' each place it
appears; and
(ii) in subparagraph (B), by striking ``under
paragraph (2)'' and inserting ``on account of
past-due support described in paragraph
(2)(B)''.
(2) Section 464(b) (42 U.S.C. 664(b)) is amended--
(A) by striking ``(b)(1)'' and inserting
``(b) Regulations.--''; and
(B) by striking paragraph (2).
(3) Section 464(c) (42 U.S.C. 664(c)) is amended--
(A) by striking ``(c)(1) Except as provided
in paragraph (2), as'' and inserting ``(c)
Definition.--As''; and
(B) by striking paragraphs (2) and (3).
(c) Effective Date.--The amendments made by this section
shall become effective October 1, 1999.
SEC. 9462. INTERNAL REVENUE SERVICE COLLECTION OF ARREARS.
(a) Amendment to Internal Revenue Code.--Section 6305(a) of
the Internal Revenue Code of 1986 is amended--
(1) in paragraph (1), by inserting ``except as
provided in paragraph (5)'' after ``collected'';
(2) by striking ``and'' at the end of paragraph (3);
(3) by striking the period at the end of paragraph
(4) and inserting a comma;
(4) by adding after paragraph (4) the following new
paragraph:
``(5) no additional fee may be assessed for
adjustments to an amount previously certified pursuant
to such section 452(b) with respect to the same
obligor.''; and
(5) by striking ``Secretary of Health, Education, and
Welfare'' each place it appears and inserting
``Secretary of Health and Human Services''.
(b) Effective Date.--The amendments made by this section
shall become effective October 1, 1997.
SEC. 9463. AUTHORITY TO COLLECT SUPPORT FROM FEDERAL EMPLOYEES.
(a) Consolidation and Streamlining of Authorities.--
(1) Section 459 (42 U.S.C. 659) is amended in the
caption by inserting ``income withholding,'' before
``garnishment''.
(2) Section 459(a) (42 U.S.C. 659(a)) is amended--
(A) by striking ``(a)'' and inserting ``(a)
Consent To Support Enforcement.--
(B) by striking ``section 207'' and inserting
``section 207 of this Act and 38 U.S.C. 5301'';
and
(C) by striking all that follows ``a private
person,'' and inserting ``to withholding in
accordance with State law pursuant to
subsections (a)(1) and (b) of section 466 and
regulations of the Secretary thereunder, and to
any other legal process brought, by a State
agency administering a program under this part
or by an individual obligee, to enforce the
legal obligation of such individual to provide
child support or alimony.''.
(3) Section 459(b) (42 U.S.C. 659(b)) is amended to
read as follows:
``(b) Consent to Requirements Applicable to Private Person.--
Except as otherwise provided herein, each entity specified in
subsection (a) shall be subject, with respect to notice to
withhold income pursuant to subsection (a)(1) or (b) of section
466, or to any other order or process to enforce support
obligations against an individual (if such order or process
contains or is accompanied by sufficient data to permit prompt
identification of the individual and the moneys involved), to
the same requirements as would apply if such entity were a
private person.''.
(4) Section 459(c) (42 U.S.C. 659(c)) is redesignated
and relocated as paragraph (2) of subsection (f), and
is amended--
(A) by striking ``responding to
interrogatories pursuant to requirements
imposed by section 461(b)(3)'' and inserting
``taking actions necessary to comply with the
requirements of subsection (A) with regard to
any individual''; and
(B) by striking ``any of his duties'' and all
that follows and inserting ``such duties.''.
(5) Section 461 (42 U.S.C. 661) is amended by
striking subsection (b), and section 459 (42 U.S.C.
659) is amended by inserting after subsection (b) (as
added by paragraph (3) of this subsection) the
following:
``(c) Designation of Agent; Response to Notice or Process.--
(1) The head of each agency subject to the requirements of this
section shall--
``(A) designate an agent or agents to receive orders
and accept service of process; and
``(B) publish (i) in the appendix of such
regulations, (ii) in each subsequent republication of
such regulations, and (iii) annually in the Federal
Register, the designation of such agent or agents,
identified by title of position, mailing address, and
telephone number.''.
(6) Section 459 (42 U.S.C. 659) is amended by
striking subsection (d) and by inserting after
subsection (c)(1) (as added by paragraph (5) of this
subsection) the following:
``(2) Whenever an agent designated pursuant to paragraph (1)
receives notice pursuant to subsection (a)(1) or (b) of section
466, or is effectively served with any order, process, or
interrogatories, with respect to an individual's child support
or alimony payment obligations, such agent shall--
``(A) as soon as possible (but not later than fifteen
days) thereafter, send written notice of such notice or
service (together with a copy thereof) to such
individual at his duty station or last-known home
address;
``(B) within 30 days (or such longer period as may be
prescribed by applicable State law) after receipt of a
notice pursuant to subsection (a)(1) or (b) of section
466, comply with all applicable provisions of such
section 466; and
``(C) within 30 days (or such longer period as may be
prescribed by applicable State law) after effective
service of any other such order, process, or
interrogatories, respond thereto.''.
(7) Section 461 (42 U.S.C. 661) is amended by
striking subsection (c), and section 459 (42 U.S.C.
659) is amended by inserting after subsection (c) (as
added by paragraph (5) and amended by paragraph (6) of
this subsection) the following:
``(d) Priority of Claims.--In the event that a governmental
entity receives notice or is served with process, as provided
in this section, concerning amounts owed by an individual to
more than one person--
``(1) support collection under section 466(b) must be
given priority over any other process, as provided in
section 466(b)(7);
``(2) allocation of moneys due or payable to an
individual among claimants under section 466(b) shall
be governed by the provisions of such section 466(b)
and regulations thereunder; and
``(3) such moneys as remain after compliance with
subparagraphs (A) and (B) shall be available to satisfy
any other such processes on a first-come, first-served
basis, with any such process being satisfied out of
such moneys as remain after the satisfaction of all
such processes which have been previously served.''.
(8) Section 459(e) (42 U.S.C. 659(e)) is amended by
striking ``(e)'' and inserting the following:
``(e) No Requirement To Vary Pay Cycles.--''.
(9) Section 459(f) (42 U.S.C. 659(f)) is amended by
striking ``(f)'' and inserting the following:
``(f) Relief From Liability.--(1)''.
(10) Section 461(a) (42 U.S.C. 661(a)) is
redesignated and relocated as section 459(g), and is
amended--
(A) by striking ``(g)'' and inserting the
following:
``(g) Regulations.--''; and
(B) by striking ``section 459'' and inserting
``this section''.
(11) Section 462 (42 U.S.C. 662) is amended by
striking subsection (f), and section 459 (42 U.S.C.
659) is amended by inserting the following after
subsection (g) (as added by paragraph (10) of this
subsection):
``(h) Moneys Subject to Process.--(1) Subject to subsection
(i), moneys paid or payable to an individual which are
considered to be based upon remuneration for employment, for
purposes of this section--
``(A) consist of--
``(i) compensation paid or payable for
personal services of such individual, whether
such compensation is denominated as wages,
salary, commission, bonus, pay, allowances, or
otherwise (including severance pay, sick pay,
and incentive pay);
``(ii) periodic benefits (including a
periodic benefit as defined in section
228(h)(3)) or other payments--
``(I) under the insurance system
established by title II;
``(II) under any other system or fund
established by the United States which
provides for the payment of pensions,
retirement or retired pay, annuities,
dependents' or survivors' benefits, or
similar amounts payable on account of
personal services performed by the
individual or any other individual;
``(III) as compensation for death
under any Federal program;
``(IV) under any Federal program
established to provide `black lung'
benefits; or
``(V) by the Secretary of Veterans
Affairs as pension, or as compensation
for a service-connected disability or
death (except any compensation paid by
such Secretary to a former member of
the Armed Forces who is in receipt of
retired or retainer pay if such former
member has waived a portion of his
retired pay in order to receive such
compensation); and
``(iii) worker's compensation benefits paid
under Federal or State law; but
``(B) do not include any payment--
``(i) by way of reimbursement or otherwise,
to defray expenses incurred by such individual
in carrying out duties associated with his
employment; or
``(ii) as allowances for members of the
uniformed services payable pursuant to chapter
7 of title 37, United States Code, as
prescribed by the Secretaries concerned
(defined by section 101(5) of such title) as
necessary for the efficient performance of
duty.''.
(12) Section 462(g) (42 U.S.C. 662(g)) is
redesignated and relocated as section 459(i) (42 U.S.C.
659(i)).
(13)(A) Section 462 (42 U.S.C. 662) is amended--
(i) in subsection (e)(1), by redesignating
subparagraphs (A), (B), and (C) as clauses (i),
(ii), and (iii); and
(ii) in subsection (e), by redesignating
paragraphs (1) and (2) as subparagraphs (A) and
(B).
(B) Section 459 (42 U.S.C. 659) is amended by adding
at the end the following:
``(j) Definitions.--For purposes of this section--''.
(C) Subsections (a) through (e) of section 462 (42
U.S.C. 662), as amended by subparagraph (A) of this
paragraph, are relocated and redesignated as paragraphs
(1) through (4), respectively of section 459(j) (as
added by subparagraph (B) of this paragraph, (42 U.S.C.
659(j)), and the left margin of each of such paragraphs
(1) through (4) is indented 2 ems to the right of the
left margin of subsection (i) (as added by paragraph
(12) of this subsection).
(b) Conforming Amendments.--
(1) To part d of title iv.--Sections 461 and 462 (42
U.S.C. 661), as amended by subsection (a) of this
section, are repealed.
(2) To title 5, united states code.--Section 5520a of
title 5, United States Code, is amended, in subsections
(h)(2) and (i), by striking ``sections 459, 461, and
462 of the Social Security Act (42 U.S.C. 659, 661, and
662)'' and inserting ``section 459 of the Social
Security Act (42 U.S.C. 659)''.
(c) Military Retired and Retainer Pay.--(1) Definition of
Court.--Section 1408(a)(1) of title 10, United States Code, is
amended--
(A) by striking ``and'' at the end of subparagraph
(B);
(B) by striking the period at the end of subparagraph
(C) and inserting ``; and''; and
(C) by adding after subparagraph (C) the following
new paragraph:
``(D) any administrative or judicial tribunal
of a State competent to enter orders for
support or maintenance (including a State
agency administering a State program under part
D of title IV of the Social Security Act).'';
(2) Definition of Court Order.--Section 1408(a)(2) of such
title is amended by inserting ``or a court order for the
payment of child support not included in or accompanied by such
a decree or settlement,'' before ``which--''.
(3) Public Payee.--Section 1408(d) of such title is amended--
(A) in the heading, by striking ``to spouse'' and
inserting ``to (or for benefit of)''; and
(B) in paragraph (1), in the first sentence, by
inserting ``(or for the benefit of such spouse or
former spouse to a State central collections unit or
other public payee designated by a State, in accordance
with part D of title IV of the Social Security Act, as
directed by court order, or as otherwise directed in
accordance with such part D)'' before ``in an amount
sufficient''.
(4) Relationship to Part D of Title IV.--Section 1408 of such
title is amended by adding at the end the following new
subsection:
``(j) Relationship to Other Laws.--In any case involving a
child support order against a member who has never been married
to the other parent of the child, the provisions of this
section shall not apply, and the case shall be subject to the
provisions of section 459 of the Social Security Act.''.
(d) Effective Date.--The amendments made by this section
shall become effective 6 months after the date of the enactment
of this Act.
SEC. 9464. ENFORCEMENT OF CHILD SUPPORT OBLIGATIONS OF MEMBERS OF THE
ARMED FORCES.
(a) Availability of Locator Information.--
(1) Maintenance of address information.--The
Secretary of Defense shall establish a centralized
personnel locator service that includes the address of
each member of the Armed Forces under the jurisdiction
of the Secretary. Upon request of the Secretary of
Transportation, addresses for members of the Coast
Guard shall be included in the centralized personnel
locator service.
(2) Type of address.--
(A) Residential address.--Except as provided
in subparagraph (B), the address for a member
of the Armed Forces shown in the locator
service shall be the residential address of
that member.
(B) Duty address.--The address for a member
of the Armed Forces shown in the locator
service shall be the duty address of that
member in the case of a member--
(i) who is permanently assigned
overseas, to a vessel, or to a
routinely deployable unit; or
(ii) with respect to whom the
Secretary concerned makes a
determination that the member's
residential address should not be
disclosed due to national security or
safety concerns.
(3) Updating of locator information.--Within 30 days
after a member listed in the locator service
establishes a new residential address (or a new duty
address, in the case of a member covered by paragraph
(2)(B)), the Secretary concerned shall update the
locator service to indicate the new address of the
member.
(4) Availability of information.--The Secretary of
Defense shall make information regarding the address of
a member of the Armed Forces listed in the locator
service available, on request, to the Federal Parent
Locator Service.
(b) Facilitating Granting of Leave for Attendance at
Hearings.--
(1) Regulations.--The Secretary of each military
department, and the Secretary of Transportation with
respect to the Coast Guard when it is not operating as
a service in the Navy, shall prescribe regulations to
facilitate the granting of leave to a member of the
Armed Forces under the jurisdiction of that Secretary
in a case in which--
(A) the leave is needed for the member to
attend a hearing described in paragraph (2);
(B) the member is not serving in or with a
unit deployed in a contingency operation (as
defined in section 101 of title 10, United
States Code); and
(C) the exigencies of military service (as
determined by the Secretary concerned) do not
otherwise require that such leave not be
granted.
(2) Covered hearings.--Paragraph (1) applies to a
hearing that is conducted by a court or pursuant to an
administrative process established under State law, in
connection with a civil action--
(A) to determine whether a member of the
Armed Forces is a natural parent of a child; or
(B) to determine an obligation of a member of
the Armed Forces to provide child support.
(3) Definitions.--For purposes of this subsection:
(A) The term ``court'' has the meaning given
that term in section 1408(a) of title 10,
United States Code.
(B) The term ``child support'' has the
meaning given such term in section 462 of the
Social Security Act (42 U.S.C. 662).
(c) Payment of Military Retired Pay in Compliance With Child
Support Orders.--
(1) Date of certification of court order.--Section
1408 of title 10, United States Code, is amended--
(A) by redesignating subsection (i) as
subsection (j); and
(B) by inserting after subsection (h) the
following new subsection (i):
``(i) Certification Date.--It is not necessary that the date
of a certification of the authenticity or completeness of a
copy of a court order or an order of an administrative process
established under State law for child support received by the
Secretary concerned for the purposes of this section be recent
in relation to the date of receipt by the Secretary.''.
(2) Payments consistent with assignments of rights to
states.--Section 1408(d)(1) of such title is amended by
inserting after the first sentence the following: ``In
the case of a spouse or former spouse who, pursuant to
section 403(b)(1)(E)(i) of the Social Security Act,
assigns to a State the rights of the spouse or former
spouse to receive support, the Secretary concerned may
make the child support payments referred to in the
preceding sentence to that State in amounts consistent
with that assignment of rights.''.
(3) Arrearages owed by members of the uniformed
services.--Section 1408(d) of such title is amended by
adding at the end the following new paragraph:
``(6) In the case of a court order or an order of an
administrative process established under State law for which
effective service is made on the Secretary concerned on or
after the date of the enactment of this paragraph and which
provides for payments from the disposable retired pay of a
member to satisfy the amount of child support set forth in the
order, the authority provided in paragraph (1) to make payments
from the disposable retired pay of a member to satisfy the
amount of child support set forth in a court order or an order
of an administrative process established under State law shall
apply to payment of any amount of child support arrearages set
forth in that order as well as to amounts of child support that
currently become due.''.
SEC. 9465. MOTOR VEHICLE LIENS.
Section 466(a)(4) (42 U.S.C. 666(a)(4)) is amended--
(1) by striking ``(4) Procedures'' and inserting the
following:
``(4) Liens.--
``(A) In general.--Procedures''; and
(2) by adding at the end the following new
subparagraph:
``(B) Motor vehicle liens.--Procedures for
placing liens for arrears of child support on
motor vehicle titles of individuals owing such
arrears equal to or exceeding two months of
support, under which--
``(i) any person owed such arrears
may place such a lien;
``(ii) the State agency administering
the program under this part shall
systematically place such liens;
``(iii) expedited methods are
provided for--
``(I) ascertaining the amount
of arrears;
``(II) affording the person
owing the arrears or other
titleholder to contest the
amount of arrears or to obtain
a release upon fulfilling the
support obligation;
``(iv) such a lien has precedence
over all other encumbrances on a
vehicle title other than a purchase
money security interest; and
``(v) the individual or State agency
owed the arrears may execute on, seize,
and sell the property in accordance
with State law.''.
SEC. 9466. VOIDING OF FRAUDULENT TRANSFERS.
Section 466(a) (42 U.S.C. 666(a)), as amended by sections
9401(a), 9426(a), 9431, and 9442 of this Act, is amended by
inserting after paragraph (15) the following:
``(16) Fraudulent transfers.--Procedures under
which--
``(A) the State has in effect--
``(i) the Uniform Fraudulent
Conveyance Act of 1981,
``(ii) the Uniform Fraudulent
Transfer Act of 1984, or
``(iii) another law, specifying
indicia of fraud which create a prima
facie case that a debtor transferred
income or property to avoid payment to
a child support creditor, which the
Secretary finds affords comparable
rights to child support creditors; and
``(B) in any case in which the State knows of
a transfer by a child support debtor with
respect to which such a prima facie case is
established, the State must--
``(i) seek to void such transfer; or
``(ii) obtain a settlement in the
best interests of the child support
creditor.''.
SEC. 9467. STATE LAW AUTHORIZING SUSPENSION OF LICENSES.
Section 466(a) (42 U.S.C. 666(a)), as amended by sections
9401(a), 9426(a), 9431, 9442, and 9466 of this Act, is amended
by inserting after paragraph (16) the following:
``(17) Authority to withhold or suspend licenses.--
Procedures under which the State has (and uses in
appropriate cases) authority (subject to appropriate
due process safeguards) to withhold or suspend, or to
restrict the use of driver's licenses, and professional
and occupational licenses of individuals owing overdue
child support or failing, after receiving appropriate
notice, to comply with subpoenas or warrants relating
to paternity or child support proceedings.''.
SEC. 9468. REPORTING ARREARAGES TO CREDIT BUREAUS.
Section 466(a)(7) (42 U.S.C. 666(a)(7)) is amended to read as
follows:
``(7) Reporting arrearages to credit bureaus.--(A)
Procedures (subject to safeguards pursuant to
subparagraph (B)) requiring the State to report
periodically to consumer reporting agencies (as defined
in section 603(f) of the Fair Credit Reporting Act (15
U.S.C. 1681a(f)) the name of any absent parent who is
delinquent by 90 days or more in the payment of
support, and the amount of overdue support owed by such
parent.
``(B) Procedures ensuring that, in carrying out
subparagraph (A), information with respect to an absent
parent is reported--
``(i) only after such parent has been
afforded all due process required under State
law, including notice and a reasonable
opportunity to contest the accuracy of such
information; and
``(ii) only to an entity that has furnished
evidence satisfactory to the State that the
entity is a consumer reporting agency.''.
SEC. 9469. EXTENDED STATUTE OF LIMITATION FOR COLLECTION OF ARREARAGES.
(a) Amendments.--Section 466(a)(9) (42 U.S.C. 666(a)(9)) is
amended--
(1) by striking ``(9) Procedures'' and inserting the
following:
``(9) Legal treatment of arrears.--
``(A) Finality.--Procedures'';
(2) by redesignating subparagraphs (A), (B), and (C)
as clauses (i), (ii), and (iii), respectively, and by
indenting each of such clauses 2 additional ems to the
right; and
(3) by adding after and below subparagraph (A), as
redesignated, the following new subparagraph:
``(B) Statute of limitations.--Procedures
under which the statute of limitations on any
arrearages of child support extends at least
until the child owed such support is 30 years
of age.''.
(b) Application of Requirement.--The amendment made by this
section shall not be read to require any State law to revive
any payment obligation which had lapsed prior to the effective
date of such State law.
SEC. 9470. CHARGES FOR ARREARAGES.
(a) State Law Requirement.--Section 466(a) (42 U.S.C.
666(a)), as amended by sections 9401(a), 9426(a), 9431, 9442,
9466, and 9467 of this Act, is amended by inserting after
paragraph (17) the following:
``(18) Charges for arrearages.--Procedures providing
for the calculation and collection of interest or
penalties for arrearages of child support, and for
distribution of such interest or penalties collected
for the benefit of the child (except where the right to
support has been assigned to the State).''.
(b) Regulations.--The Secretary of Health and Human Services
shall establish by regulation a rule to resolve choice of law
conflicts arising in the implementation of the amendment made
by subsection (a).
(c) Conforming Amendment.--Section 454(21) (42 U.S.C.
654(21)) is repealed.
(d) Effective Date.--The amendments made by this section
shall be effective with respect to arrearages accruing on or
after October 1, 1998.
SEC. 9471. DENIAL OF PASSPORTS FOR NONPAYMENT OF CHILD SUPPORT.
(a) HHS Certification Procedure.--
(1) Secretarial responsibility.--Section 452 (42
U.S.C. 652), as amended by sections 9415(a)(3) and 9417
of this Act, is amended by adding at the end the
following new subsection:
``(l) Certifications for Purposes of Passport Restrictions.--
``(1) In general.--Where the Secretary receives a
certification by a State agency in accordance with the
requirements of section 454(28) that an individual owes
arrearages of child support in an amount exceeding
$5,000 or in an amount exceeding 24 months' worth of
child support, the Secretary shall transmit such
certification to the Secretary of State for action
(with respect to denial, revocation, or limitation of
passports) pursuant to section 9471(b) of the Omnibus
Budget Reconciliation Act of 1995.
``(2) Limit on liability.--The Secretary shall not be
liable to an individual for any action with respect to
a certification by a State agency under this
section.''.
(2) State cse agency responsibility.--Section 454 (42
U.S.C. 654), as amended by sections 9404(a), 9414(b),
and 9422(a) of this Act, is amended--
(A) by striking ``and'' at the end of
paragraph (26);
(B) by striking the period at the end of
paragraph (27) and inserting ``; and''; and
(C) by adding after paragraph (27) the
following new paragraph:
``(28) provide that the State agency will have in
effect a procedure (which may be combined with the
procedure for tax refund offset under section 464) for
certifying to the Secretary, for purposes of the
procedure under section 452(l) (concerning denial of
passports) determinations that individuals owe
arrearages of child support in an amount exceeding
$5,000 or in an amount exceeding 24 months' worth of
child support, under which procedure--
``(A) each individual concerned is afforded
notice of such determination and the
consequences thereof, and an opportunity to
contest the determination; and
``(B) the certification by the State agency
is furnished to the Secretary in such format,
and accompanied by such supporting
documentation, as the Secretary may require.''.
(b) State Department Procedure for Denial of Passports.--
(1) In general.--The Secretary of State, upon
certification by the Secretary of Health and Human
Services, in accordance with section 452(l) of the
Social Security Act, that an individual owes arrearages
of child support in excess of $5,000, shall refuse to
issue a passport to such individual, and may revoke,
restrict, or limit a passport issued previously to such
individual.
(2) Limit on liability.--The Secretary of State shall
not be liable to an individual for any action with
respect to a certification by a State agency under this
section.
(c) Effective Date.--This section and the amendments made by
this section shall become effective October 1, 1996.
SEC. 9472. INTERNATIONAL CHILD SUPPORT ENFORCEMENT.
(a) Sense of the Congress That the United States Should
Ratify the United Nations Convention of 1956.--It is the sense
of the Congress that the United States should ratify the United
Nations Convention of 1956.
(b) Treatment of International Child Support Cases as
Interstate Cases.--Section 454 (42 U.S.C. 654), as amended by
sections 9404(a), 9414(b), 9422(a), and 9471(a)(2) of this Act,
is amended--
(1) by striking ``and'' at the end of paragraph (27);
(2) by striking the period at the end of paragraph
(28) and inserting ``; and''; and
(3) by inserting after paragraph (28) the following:
``(29) provide that the State must treat
international child support cases in the same manner as
the State treats interstate child support cases.''.
SEC. 9473. SEIZURE OF LOTTERY WINNINGS, SETTLEMENTS, PAYOUTS, AWARDS,
AND BEQUESTS, AND SALE OF FORFEITED PROPERTY, TO
PAY CHILD SUPPORT ARREARAGES.
Section 466(a) (42 U.S.C. 666(a)), as amended by sections
9401(a), 9426(a), 9431, 9442, 9466, 9467, and 9470(a) of this
Act, is amended by inserting after paragraph (18) the
following:
``(19) Procedures, in addition to other income
withholding procedures, under which a lien is imposed
against property with the following effect:
``(A) The person required to make a payment
under a policy of insurance or a settlement of
a claim made with respect to the policy shall--
``(i) suspend the payment until an
inquiry is made to and a response
received from the agency as to whether
the person otherwise entitled to the
payment owes a child support arrearage;
and
``(ii) if there is such an arrearage,
withhold from the payment the lesser of
the amount of the payment or the amount
of the arrearage, and pay the amount
withheld to the agency for
distribution.
``(B) The payor of any amount pursuant to an
award, judgment, or settlement in any action
brought in Federal or State court shall--
``(i) suspend the payment of the
amount until an inquiry is made to and
a response is received from the agency
as to whether the person otherwise
entitled to the payment owes a child
support arrearage; and
``(ii) if there is such an arrearage,
withhold from the payment the lesser of
the amount of the payment or the amount
of the arrearage, and pay the amount
withheld to the agency for
distribution.
``(C) If the State seizes property forfeited
to the State by an individual by reason of a
criminal conviction, the State shall--
``(i) hold the property until an
inquiry is made to and a response is
received from the agency as to whether
the individual owes a child support
arrearage; and
``(ii) if there is such an arrearage,
sell the property and, after satisfying
the claims of all other private or
public claimants to the property and
deducting from the proceeds of the sale
the attendant costs (such as for
towing, storage, and the sale), pay the
lesser of the remaining proceeds or the
amount of the arrearage directly to the
agency for distribution.
``(D) Any person required to make a payment
in respect of a decedent shall--
``(i) suspend the payment until an
inquiry is made to and a response
received from the agency as to whether
the person otherwise entitled to the
payment owes a child support arrearage;
and
``(ii) if there is such an arrearage,
withhold from the payment the lesser of
the amount of the payment or the amount
of the arrearage, and pay the amount
withheld to the agency for
distribution.''.
SEC. 9474. LIABILITY OF GRANDPARENTS FOR FINANCIAL SUPPORT OF CHILDREN
OF THEIR MINOR CHILDREN.
Section 466(a) (42 U.S.C. 666(a)), as amended by sections
9401(a), 9426(a), 9431, 9442, 9466, 9467, 9470(a), and 9473 of
this Act, is amended by inserting after paragraph (19) the
following:
``(20) Procedures under which each parent of an
individual who has not attained 18 years of age is
liable for the financial support of any child of the
individual to the extent that the individual is unable
to provide such support. The preceding sentence shall
not apply to the State if the State plan explicitly
provides for such inapplicability.''.
SEC. 9475. SENSE OF THE CONGRESS REGARDING PROGRAMS FOR NONCUSTODIAL
PARENTS UNABLE TO MEET CHILD SUPPORT OBLIGATIONS.
It is the sense of the Congress that the States should
develop programs, such as the program of the State of Wisconsin
known as the ``Children's First Program'', that are designed to
work with noncustodial parents who are unable to meet their
child support obligations.
CHAPTER 8--MEDICAL SUPPORT
SEC. 9481. TECHNICAL CORRECTION TO ERISA DEFINITION OF MEDICAL CHILD
SUPPORT ORDER.
(a) In General.--Section 609(a)(2)(B) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1169(a)(2)(B)) is amended--
(1) by striking ``issued by a court of competent
jurisdiction'';
(2) by striking the period at the end of clause (ii)
and inserting a comma; and
(3) by adding, after and below clause (ii), the
following:
``if such judgment, decree, or order (I) is
issued by a court of competent jurisdiction or
(II) is issued by an administrative adjudicator
and has the force and effect of law under
applicable State law.''.
(b) Effective Date.--
(1) In general.--The amendments made by this section
shall take effect on the date of the enactment of this
Act.
(2) Plan amendments not required until january 1,
1996.--Any amendment to a plan required to be made by
an amendment made by this section shall not be required
to be made before the first plan year beginning on or
after January 1, 1996, if--
(A) during the period after the date before
the date of the enactment of this Act and
before such first plan year, the plan is
operated in accordance with the requirements of
the amendments made by this section, and
(B) such plan amendment applies retroactively
to the period after the date before the date of
the enactment of this Act and before such first
plan year.
A plan shall not be treated as failing to be operated
in accordance with the provisions of the plan merely
because it operates in accordance with this paragraph.
CHAPTER 9--FOOD STAMP PROGRAM REQUIREMENTS
SEC. 9491. COOPERATION WITH CHILD SUPPORT AGENCIES.
Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015) is
amended adding at the end the following:
``(i) Custodial Parent's Cooperation With Child Support
Agencies.--
``(1) In general.--At the option of a State agency,
subject to paragraphs (2) and (3), no natural or
adoptive parent or other individual (collectively
referred to in this subsection as `the individual') who
is living with and exercising parental control over a
child under the age of 18 who has an absent parent
shall be eligible to participate in the food stamp
program unless the individual cooperates with the State
agency administering the program established under part
D of title IV of the Social Security Act (42 U.S.C. 651
et seq.)--
``(A) in establishing the paternity of the
child (if the child is born out of wedlock);
and
``(B) in obtaining support for--
``(i) the child; or
``(ii) the individual and the child.
``(2) Good cause for noncooperation.--Paragraph (1)
shall not apply to the individual if good cause is
found for refusing to cooperate, as determined by the
State agency in accordance with standards prescribed by
the Secretary in consultation with the Secretary of
Health and Human Services. The standards shall take
into consideration circumstances under which
cooperation may be against the best interests of the
child.
``(3) Fees.--Paragraph (1) shall not require the
payment of a fee or other cost for services provided
under part D of title IV of the Social Security Act (42
U.S.C. 651 et seq.).
``(j) Non-Custodial Parent's Cooperation With Child Support
Agencies.--
``(1) In general.--At the option of a State agency,
subject to paragraphs (2) and (3), a putative or
identified non-custodial parent of a child under the
age of 18 (referred to in this subsection as `the
individual') shall not be eligible to participate in
the food stamp program if the individual refuses to
cooperate with the State agency administering the
program established under part D of title IV of the
Social Security Act (42 U.S.C. 651 et seq.)--
``(A) in establishing the paternity of the
child (if the child is born out of wedlock);
and
``(B) in providing support for the child.
``(2) Refusal to cooperate.--
``(A) Guidelines.--The Secretary, in
consultation with the Secretary of Health and
Human Services, shall develop guidelines on
what constitutes a refusal to cooperate under
paragraph (1).
``(B) Procedures.--The State agency shall
develop procedures, using guidelines developed
under subparagraph (A), for determining whether
an individual is refusing to cooperate under
paragraph (1).
``(3) Fees.--Paragraph (1) shall not require the
payment of a fee or other cost for services provided
under part D of title IV of the Social Security Act (42
U.S.C. 651 et seq.).
``(4) Privacy.--The State agency shall provide
safeguards to restrict the use of information collected
by a State agency administering the program established
under part D of title IV of the Social Security Act (42
U.S.C. 651 et seq.) to purposes for which the
information is collected.''.
SEC. 9492. DISQUALIFICATION FOR CHILD SUPPORT ARREARS.
Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as
amended by section 9491 of this Act, is amended by adding at
the end the following:
``(k) Disqualification for Child Support Arrears.--
``(1) In general.--At the option of a State agency,
except as provided in paragraph (2), no individual
shall be eligible to participate in the food stamp
program as a member of any household during any month
that the individual is delinquent in any payment due
under a court order for the support of a child of the
individual.
``(2) Exceptions.--Paragraph (1) shall not apply if--
``(A) a court is allowing the individual to
delay payment; or
``(B) the individual is complying with a
payment plan approved by a court or the State
agency designated under part D of title IV of
the Social Security Act (42 U.S.C. 651 et seq.)
to provide support for the child of the
individual.''.
CHAPTER 10--EFFECT OF ENACTMENT
SEC. 9498. EFFECTIVE DATES.
(a) In General.--Except as otherwise specifically provided
(but subject to subsections (b) and (c))--
(1) provisions of this title requiring enactment or
amendment of State laws under section 466 of the Social
Security Act, or revision of State plans under section
454 of such Act, shall be effective with respect to
periods beginning on and after October 1, 1996; and
(2) all other provisions of this title shall become
effective upon enactment.
(b) Grace Period for State Law Changes.--The provisions of
this title shall become effective with respect to a State on
the later of--
(1) the date specified in this title, or
(2) the effective date of laws enacted by the
legislature of such State implementing such provisions,
but in no event later than the first day of the first calendar
quarter beginning after the close of the first regular session
of the State legislature that begins after the date of
enactment of this Act. For purposes of the previous sentence,
in the case of a State that has a 2-year legislative session,
each year of such session shall be deemed to be a separate
regular session of the State legislature.
(c) Grace Period for State Constitutional Amendment.--A State
shall not be found out of compliance with any requirement
enacted by this title if it is unable to comply without
amending the State constitution until the earlier of--
(1) the date one year after the effective date of the
necessary State constitutional amendment, or
(2) the date five years after enactment of this
title.
SEC. 9499. SEVERABILITY.
If any provision of this title or the application thereof to
any person or circumstance is held invalid, the invalidity
shall not affect other provisions or applications of this title
which can be given effect without regard to the invalid
provision or application, and to this end the provisions of
this title shall be severable.
Subtitle E--Teen Pregnancy and Family Stability
SEC. 9501. STATE OPTION TO DENY TEMPORARY EMPLOYMENT ASSISTANCE FOR
ADDITIONAL CHILDREN.
(a) In General.--Section 402(d)(1), as added by section
9101(a) of this Act, is amended--
(1) by striking ``(1) Determination of need.--'' and
inserting the following:
``(1) Determination of need.--
``(A) In general.--''; and
(2) by adding at the end the following:
``(B) Optional denial of assistance to
families having additional children while
receiving assistance.--At the option of the
State, the State plan may provide that--
``(i)(I) a child shall not be
considered a needy child if the child
is born (other than as a result of rape
or incest) to a member of a family--
``(aa) while the family was a
recipient of assistance under
the State plan; or
``(bb) during the 6-month
period ending with the date the
family applied for such
assistance; and
``(II) if the value of assistance to
a family under the State plan approved
under this part is reduced by reason of
subclause (I), each member of the
family shall be considered to be
receiving such assistance for purposes
of eligibility for medical assistance
under the State plan approved under
title XIX for so long as assistance to
the family under the State plan
approved under this part would
otherwise not be so reduced; and
``(ii) if the State exercises the
option, the State may provide the
family with vouchers, in amounts not
exceeding the amount of any such
reduction in assistance, that may be
used only to pay for particular goods
and services specified by the State as
suitable for the care of the child of
the parent (such as diapers, clothing,
or school supplies).''.
(b) Effective Date.--The amendment made by subsection (a) of
this section shall take effect in the same manner as the
amendment made by section 9101(a) takes effect.
SEC. 9502. SUPERVISED LIVING ARRANGEMENTS FOR MINORS.
(a) In General.--Section 402(c), as added by section 9101(a)
of this Act, is amended by adding at the end the following:
``(8) Supervised living arrangements for minors.--The
State plan shall provide that--
``(A) except as provided in subparagraph (B),
in the case of any individual who is under age
18 and has never married, and who has a needy
child in his or her care (or is pregnant and is
eligible for temporary employment assistance
under the State plan)--
``(i) such individual may receive
such assistance for the individual and
such child (or for herself in the case
of a pregnant woman) only if such
individual and child (or such pregnant
woman) reside in a place of residence
maintained by a parent, legal guardian,
or other adult relative of such
individual as such parent's,
guardian's, or adult relative's own
home; and
``(ii) such assistance (where
possible) shall be provided to the
parent, legal guardian, or other adult
relative on behalf of such individual
and child; and
``(B)(i) in the case of an individual
described in clause (ii)--
``(I) the State agency shall assist
such individual in locating an
appropriate adult-supervised supportive
living arrangement taking into
consideration the needs and concerns of
the individual, unless the State agency
determines that the individual's
current living arrangement is
appropriate, and thereafter shall
require that the individual (and child,
if any) reside in such living
arrangement as a condition of the
continued receipt of assistance under
the plan (or in an alternative
appropriate arrangement, should
circumstances change and the current
arrangement cease to be appropriate),
or
``(II) if the State agency is unable,
after making diligent efforts, to
locate any such appropriate living
arrangement, the State agency shall
provide for comprehensive case
management, monitoring, and other
social services consistent with the
best interests of the individual (and
child) while living independently (as
determined by the State agency); and
``(ii) for purposes of clause (i), an
individual is described in this clause if--
``(I) such individual has no parent
or legal guardian of his or her own who
is living and whose whereabouts are
known;
``(II) no living parent or legal
guardian of such individual allows the
individual to live in the home of such
parent or guardian;
``(III) the State agency determines
that the physical or emotional health
of such individual or any needy child
of the individual would be jeopardized
if such individual and such needy child
lived in the same residence with such
individual's own parent or legal
guardian; or
``(IV) the State agency otherwise
determines (in accordance with
regulations issued by the Secretary)
that it is in the best interest of the
needy child to waive the requirement of
subparagraph (A) with respect to such
individual.''.
(b) Effective Date.--The amendment made by subsection (a) of
this section shall take effect in the same manner as the
amendment made by section 9101(a) takes effect.
SEC. 9503. NATIONAL CLEARINGHOUSE ON ADOLESCENT PREGNANCY.
(a) In General.--Title XX (42 U.S.C. 1397-1397f), as amended
by section 9205(b) of this Act, is amended by adding at the end
the following:
``SEC. 2010. NATIONAL CLEARINGHOUSE ON ADOLESCENT PREGNANCY.
``(a) National Clearinghouse on Adolescent Pregnancy.--
``(1) Establishment.--The responsible Federal
officials shall establish, through grant or contract, a
national center for the collection and provision of
programmatic information and technical assistance that
relates to adolescent pregnancy prevention programs, to
be known as the `National Clearinghouse on Adolescent
Pregnancy Prevention Programs'.
``(2) Functions.--The national center established
under paragraph (1) shall serve as a national
information and data clearinghouse, and as a training,
technical assistance, and material development source
for adolescent pregnancy prevention programs. Such
center shall--
``(A) develop and maintain a system for
disseminating information on all types of
adolescent pregnancy prevention programs and on
the state of adolescent pregnancy prevention
program development, including information
concerning the most effective model programs;
``(B) develop and sponsor a variety of
training institutes and curricula for
adolescent pregnancy prevention program staff;
``(C) identify model programs representing
the various types of adolescent pregnancy
prevention programs;
``(D) develop technical assistance materials
and activities to assist other entities in
establishing and improving adolescent pregnancy
prevention programs;
``(E) develop networks of adolescent
pregnancy prevention programs for the purpose
of sharing and disseminating information; and
``(F) conduct such other activities as the
responsible Federal officials find will assist
in developing and carrying out programs or
activities to reduce adolescent pregnancy.
``(b) Funding.--The responsible Federal officials shall make
grants to eligible entities for the establishment and operation
of a National Clearinghouse on Adolescent Pregnancy Prevention
Programs under subsection (a) so that in the aggregate the
expenditures for such grants do not exceed $2,000,000 for
fiscal year 1996, $4,000,000 for fiscal year 1997, $8,000,000
for fiscal year 1998, and $10,000,000 for fiscal year 1999 and
each subsequent fiscal year.
``(c) Definitions.--As used in this section:
``(1) Adolescents.--The term `adolescents' means
youth who are ages 10 through 19.
``(2) Eligible entity.--The term `eligible entity'
means a partnership that includes--
``(A) a local education agency, acting on
behalf of one or more schools, together with
``(B) one or more community-based
organizations, institutions of higher
education, or public or private agencies or
organizations.
``(3) Eligible area.--The term `eligible area' means
a school attendance area in which--
``(A) at least 75 percent of the children are
from low-income families as that term is used
in part A of title I of the Elementary and
Secondary Education Act of 1965; or
``(B) the number of children receiving
assistance under a State plan approved under
part A of title IV of this Act is substantial
as determined by the responsible Federal
officials; or
``(C) the unmarried adolescent birth rate is
high, as determined by the responsible Federal
officials.
``(4) School.--The term `school' means a public
elementary, middle, or secondary school.
``(5) Responsible federal officials.--The term
`responsible Federal officials' means the Secretary of
Education, the Secretary of Health and Human Services,
and the Chief Executive Officer of the Corporation for
National and Community Service.''.
(b) Effective Date.--The amendment made by this section shall
become effective January 1, 1996.
SEC. 9504. REQUIRED COMPLETION OF HIGH SCHOOL OR OTHER TRAINING FOR
TEENAGE PARENTS.
(a) In General.--Section 403(b)(1)(D), as added by section
9101(a) of this Act, is amended--
(1) by inserting ``(i)'' after ``(D)''; and
(2) by adding at the end the following:
``(ii) in the case of a client who is a
custodial parent who is under age 18 (or age
19, at the option of the State), has not
successfully completed a high-school education
(or its equivalent), and is required to
participate in the Work First program
(including an individual who would otherwise be
exempt from participation in the program),
shall provide that--
``(I) such parent participate in--
``(aa) educational activities
directed toward the attainment
of a high school diploma or its
equivalent on a full-time (as
defined by the educational
provider) basis; or
``(bb) an alternative
educational or training program
on a full-time (as defined by
the provider) basis; and
``(II) child care be provided in
accordance with section 2009 with
respect to the family.''.
(b) State Option To Provide Additional Incentives and
Penalties to Encourage Teen Parents to Complete High School and
Participate in Parenting Activities.--
(1) State plan.--Section 403(b)(1)(D), as amended by
subsection (a) of this section, is amended by adding at
the end the following:
``(iii) at the option of the State, may
provide that the client who is a custodial
parent or pregnant woman who is under age 19
(or age 21, at the option of the State)
participate in a program of monetary incentives
and penalties which--
``(I) may, at the option of the
State, require full-time participation
by such custodial parent or pregnant
woman in secondary school or equivalent
educational activities, or
participation in a course or program
leading to a skills certificate found
appropriate by the State agency or
parenting education activities (or any
combination of such activities and
secondary education);
``(II) shall require that the needs
of such custodial parent or pregnant
woman be reviewed and the program
assure that, either in the initial
development or revision of such
individual's individual responsibility
plan, there will be included a
description of the services that will
be provided to the client and the way
in which the program and service
providers will coordinate with the
educational or skills training
activities in which the client is
participating;
``(III) shall provide monetary
incentives (to be treated as assistance
under the State plan) for more than
minimally acceptable performance of
required educational activities;
``(IV) shall provide penalties (which
may be those required by subsection (e)
or, with the approval of the Secretary,
other monetary penalties that the State
finds will better achieve the
objectives of the program) for less
than minimally acceptable performance
of required activities;
``(V) shall provide that when a
monetary incentive is payable because
of the more than minimally acceptable
performance of required educational
activities by a custodial parent, the
incentive be paid directly to such
parent, regardless of whether the State
agency makes payment of assistance
under the State plan directly to such
parent; and
``(VI) for purposes of any other
Federal or federally-assisted program
based on need, shall not consider any
monetary incentive paid under the State
plan as income in determining a
family's eligibility for or amount of
benefits under such program, and if
assistance is reduced by reason of a
penalty under this clause, such other
program shall treat the family involved
as if no such penalty has been
applied.''.
(c) Effective Date.--The amendments made by this section
shall take effect in the same manner as the amendment made by
section 9101(a) takes effect.
SEC. 9505. DENIAL OF FEDERAL HOUSING BENEFITS TO MINORS WHO BEAR
CHILDREN OUT-OF-WEDLOCK.
(a) Prohibition of Assistance.--Notwithstanding any other
provision of law, a household whose head of household is an
individual who has borne a child out-of-wedlock before
attaining 18 years of age may not be provided Federal housing
assistance for a dwelling unit until attaining such age,
unless--
(1) after the birth of the child--
(A) the individual marries an individual who
has been determined by the relevant State to be
the biological father of the child; or
(B) the biological parent of the child has
legal custody of the child and marries an
individual who legally adopts the child;
(2) the individual is a biological and custodial
parent of another child who was not born out-of-
wedlock; or
(3) eligibility for such Federal housing assistance
is based in whole or in part on any disability or
handicap of a member of the household.
(4) the state deems it necessary.
(b) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) Covered program.--The term ``covered program''
means--
(A) the program of rental assistance on
behalf of low-income families provided under
section 8 of the United States Housing Act of
1937 (42 U.S.C. 1437f);
(B) the public housing program under title I
of the United States Housing Act of 1937 (42
U.S.C. 1437 et seq.);
(C) the program of rent supplement payments
on behalf of qualified tenants pursuant to
contracts entered into under section 101 of the
Housing and Urban Development Act of 1965 (12
U.S.C. 1701s);
(D) the program of interest reduction
payments pursuant to contracts entered into by
the Secretary of Housing and Urban Development
under section 236 of the National Housing Act
(12 U.S.C. 1715z-1);
(E) the program for mortgage insurance
provided pursuant to sections 221(d) (3) or (4)
of the National Housing Act (12 U.S.C.
1715l(d)) for multifamily housing for low- and
moderate-income families;
(F) the rural housing loan program under
section 502 of the Housing Act of 1949 (42
U.S.C. 1472);
(G) the rural housing loan guarantee program
under section 502(h) of the Housing Act of 1949
(42 U.S.C. 1472(h));
(H) the loan and grant programs under section
504 of the Housing Act of 1949 (42 U.S.C. 1474)
for repairs and improvements to rural
dwellings;
(I) the program of loans for rental and
cooperative rural housing under section 515 of
the Housing Act of 1949 (42 U.S.C. 1485);
(J) the program of rental assistance payments
pursuant to contracts entered into under
section 521(a)(2)(A) of the Housing Act of 1949
(42 U.S.C. 1490a(a)(2)(A));
(K) the loan and assistance programs under
sections 514 and 516 of the Housing Act of 1949
(42 U.S.C. 1484, 1486) for housing for farm
labor;
(L) the program of grants and loans for
mutual and self-help housing and technical
assistance under section 523 of the Housing Act
of 1949 (42 U.S.C. 1490c);
(M) the program of grants for preservation
and rehabilitation of housing under section 533
of the Housing Act of 1949 (42 U.S.C. 1490m);
and
(N) the program of site loans under section
524 of the Housing Act of 1949 (42 U.S.C.
1490d).
(2) Covered project.--The term ``covered project''
means any housing for which Federal housing assistance
is provided that is attached to the project or specific
dwelling units in the project.
(3) Federal housing assistance.--The term ``Federal
housing assistance'' means--
(A) assistance provided under a covered
program in the form of any contract, grant,
loan, subsidy, cooperative agreement, loan or
mortgage guarantee or insurance, or other
financial assistance; or
(B) occupancy in a dwelling unit that is--
(i) provided assistance under a
covered program; or
(ii) located in a covered project and
subject to occupancy limitations under
a covered program that are based on
income.
(4) State.--The term ``State'' means the States of
the United States, the District of Columbia, the
Commonwealth of Puerto Rico, the Commonwealth of the
Northern Mariana Islands, Guam, the Virgin Islands,
American Samoa, and any other territory or possession
of the United States.
(c) Limitations on Applicability.--Subsection (a) shall not
apply to Federal housing assistance provided for a household
pursuant to an application or request for such assistance made
by such household before the effective date of this Act if the
household was receiving such assistance on the effective date
of this Act.
SEC. 9506. STATE OPTION TO DENY TEMPORARY EMPLOYMENT ASSISTANCE TO
MINOR PARENTS.
(a) In General.--Section 402(d)(1), as added by section
9101(a) of this Act and as amended by section 9501(a) of this
Act, is amended by adding at the end the following:
``(C) Optional denial of assistance to minor
parents.--At the option of the State, the State
plan may provide that--
``(i)(I) in determining the need of a
family, the State may disregard the
needs of any family member who is a
parent and has not attained 18 years of
age or such lesser age as the State may
prescribe; and
``(II) if the value of the assistance
provided to a family under the State
plan approved under this part is
reduced by reason of subclause (I),
each member of the family shall be
considered to be receiving such
assistance for purposes of eligibility
for medical assistance under the State
plan approved under title XIX for so
long as such assistance under the State
plan approved under this part would
otherwise not be so reduced; and
``(ii) if the State exercises the option, the
State may provide the family with vouchers, in
amounts not exceeding the value of any such
reduction in assistance, that may be used only
to pay for--
``(I) particular goods and services
specified by the State as suitable for
the care of the child of the parent
(such as diapers, clothing, or cribs);
and
``(II) the costs associated with a
maternity home, foster home, or other
adult-supervised supportive living
arrangement in which the parent and the
child live.''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect in the same manner in which the amendment
made by section 9101(a) takes effect.
Subtitle F--SSI Reform
SEC. 9601. DEFINITION AND ELIGIBILITY RULES.
(a) Definition of Childhood Disability.--Section 1614(a)(3)
(42 U.S.C. 1382c(a)(3)) is amended--
(1) in subparagraph (A), by striking ``An
individual'' and inserting ``Except as provided in
subparagraph (C), an individual'';
(2) in subparagraph (A), by striking ``(or, in the
case of an individual under the age of 18, if he
suffers from any medically determinable physical or
mental impairment of comparable severity)'';
(3) by redesignating subparagraphs (C) through (H) as
subparagraphs (D) through (I), respectively;
(4) by inserting after subparagraph (B) the following
new subparagraph:
``(C) An individual under the age of 18 shall be considered
disabled for the purposes of this title if that individual has
a medically determinable physical or mental impairment, which
results in marked and severe functional limitations, and which
can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than 12
months.''; and
(5) in subparagraph (F), as so redesignated by
paragraph (3) of this subsection, by striking ``(D)''
and inserting ``(E)''.
(b) Changes to Childhood SSI Regulations.--
(1) Modification to medical criteria for evaluation
of mental and emotional disorders.--The Commissioner of
Social Security shall modify sections 112.00C.2. and
112.02B.2.c.(2) of appendix 1 to subpart P of part 404
of title 20, Code of Federal Regulations, to eliminate
references to maladaptive behavior in the domain of
personal/behavorial function.
(2) Discontinuance of individualized functional
assessment.--The Commissioner of Social Security shall
discontinue the individualized functional assessment
for children set forth in sections 416.924d and
416.924e of title 20, Code of Federal Regulations.
(c) Effective Date; Regulations; Application to Current
Recipients.--
(1) In general.--The amendments made by subsections
(a) and (b) shall apply to applicants for benefits for
months beginning on or after January 1, 1997.
(2) Regulations.--The Commissioner of Social Security
shall issue such regulations as the Commissioner
determines to be necessary to implement the amendments
made by subsections (a) and (b), not later than January
1, 1997.
(3) Application to current recipients.--
(A) Eligibility determinations.--Beginning on
January 1, 1997, and ending not later than
January 1, 1998, the Commissioner of Social
Security shall redetermine the eligibility of
any individual under age 18 who is receiving
supplemental security income benefits based on
a disability under title XVI of the Social
Security Act as of the date of the enactment of
this Act and whose eligibility for such
benefits may terminate by reason of the
amendments made by subsection (a) or (b). With
respect to any redetermination under this
subparagraph--
(i) section 1614(a)(4) of the Social
Security Act (42 U.S.C. 1382c(a)(4))
shall not apply;
(ii) the Commissioner of Social
Security shall apply the eligibility
criteria for new applicants for
benefits under title XVI of such Act;
(iii) the Commissioner shall give
such redetermination priority over all
continuing eligibility reviews and
other reviews under such title; and
(iv) such redetermination shall be
counted as a review or redetermination
otherwise required to be made under
section 208 of the Social Security
Independence and Program Improvements
Act of 1994 or any other provision of
title XVI of the Social Security Act.
(B) Notice.--Not later than 90 days after the
date of the enactment of this Act, the
Commissioner of Social Security shall notify an
individual described in subparagraph (A) of the
provisions of this paragraph.
SEC. 9602. ELIGIBILITY REDETERMINATIONS AND CONTINUING DISABILITY
REVIEWS.
(a) Continuing Disability Reviews Relating to Certain
Children.--Section 1614(a)(3)(H) (42 U.S.C. 1382c(a)(3)(H)), as
so redesignated by section 9601(a)(3) of this Act, is amended--
(1) by inserting ``(i)'' after ``(H)''; and
(2) by adding at the end the following new clause:
``(ii)(I) Not less frequently than once every 3 years, the
Commissioner shall review in accordance with paragraph (4) the
continued eligibility for benefits under this title of each
individual who has not attained 18 years of age and is eligible
for such benefits by reason of an impairment (or combination of
impairments) which may improve (or, which is unlikely to
improve, at the option of the Commissioner).
``(II) A parent or guardian of a recipient whose case is
reviewed under this clause shall present, at the time of
review, evidence demonstrating that the recipient is, and has
been, receiving treatment, to the extent considered medically
necessary and available, of the condition which was the basis
for providing benefits under this title.''.
(b) Disability Eligibility Redeterminations Required for SSI
Recipients Who Attain 18 Years of Age.--
(1) In general.--Section 1614(a)(3)(H) (42 U.S.C.
1382c(a)(3)(H)), as so redesignated by section
9601(a)(3) of this Act and as amended by subsection (a)
of this section, is amended by adding at the end the
following new clause:
``(iii) If an individual is eligible for benefits under this
title by reason of disability for the month preceding the month
in which the individual attains the age of 18 years, the
Commissioner shall redetermine such eligibility--
``(I) during the 1-year period beginning on the
individual's 18th birthday; and
``(II) by applying the criteria used in determining
the initial eligibility for applicants who have
attained the age of 18 years.
With respect to a redetermination under this clause, paragraph
(4) shall not apply and such redetermination shall be
considered a substitute for a review or redetermination
otherwise required under any other provision of this
subparagraph during that 1-year period.''.
(2) Conforming repeal.--Section 207 of the Social
Security Independence and Program Improvements Act of
1994 (42 U.S.C. 1382 note; 108 Stat. 1516) is hereby
repealed.
(c) Continuing Disability Review Required for Low Birth
Weight Babies.--Section 1614(a)(3)(H) (42 U.S.C.
1382c(a)(3)(H)), as so redesignated by section 9601(a)(3) of
this Act and as amended by subsections (a) and (b) of this
section, is amended by adding at the end the following new
clause:
``(iv)(I) Not later than 12 months after the birth of an
individual, the Commissioner shall review in accordance with
paragraph (4) the continuing eligibility for benefits under
this title by reason of disability of such individual whose low
birth weight is a contributing factor material to the
Commissioner's determination that the individual is disabled.
``(II) A review under subclause (I) shall be considered a
substitute for a review otherwise required under any other
provision of this subparagraph during that 12-month period.
``(III) A parent or guardian of a recipient whose case is
reviewed under this clause shall present, at the time of
review, evidence demonstrating that the recipient is, and has
been, receiving treatment, to the extent considered medically
necessary and available, of the condition which was the basis
for providing benefits under this title.''.
(d) Effective Date.--The amendments made by this section
shall apply to benefits for months beginning on or after the
date of the enactment of this Act, without regard to whether
regulations have been issued to implement such amendments.
SEC. 9603. ADDITIONAL ACCOUNTABILITY REQUIREMENTS.
(a) Tightening of Representative Payee Requirements.--
(1) Clarification of role.--Section 1631(a)(2)(B)(ii)
(42 U.S.C. 1383(a)(2)(B)(ii)) is amended by striking
``and'' at the end of subclause (II), by striking the
period at the end of subclause (IV) and inserting ``;
and'', and by adding after subclause (IV) the following
new subclause:
``(V) advise such person through the notice of award
of benefits, and at such other times as the
Commissioner of Social Security deems appropriate, of
specific examples of appropriate expenditures of
benefits under this title and the proper role of a
representative payee.''.
(2) Documentation of expenditures required.--
(A) In general.--Subparagraph (C)(i) of
section 1631(a)(2) (42 U.S.C. 1383(a)(2)) is
amended to read as follows:
``(C)(i) In any case where payment is made to a
representative payee of an individual or spouse, the
Commissioner of Social Security shall--
``(I) require such representative payee to document
expenditures and keep contemporaneous records of
transactions made using such payment; and
``(II) implement statistically valid procedures for
reviewing a sample of such contemporaneous records in
order to identify instances in which such
representative payee is not properly using such
payment.''.
(B) Conforming amendment with respect to
parent payees.--Clause (ii) of section
1631(a)(2)(C) (42 U.S.C. 1383(a)(2)(C)) is
amended by striking ``Clause (i)'' and
inserting ``Subclauses (II) and (III) of clause
(i)''.
(3) Effective date.--The amendments made by this
subsection shall apply to benefits paid after the date
of the enactment of this Act.
(b) Dedicated Savings Accounts.--
(1) In general.--Section 1631(a)(2)(B) (42 U.S.C.
1383(a)(2)(B)) is amended by adding at the end the
following:
``(xiv) Notwithstanding clause (x), the Commissioner of
Social Security may, at the request of the representative
payee, pay any lump sum payment for the benefit of a child into
a dedicated savings account that could only be used to purchase
for such child--
``(I) education and job skills training;
``(II) special equipment or housing modifications or
both specifically related to, and required by the
nature of, the child's disability; and
``(III) appropriate therapy and rehabilitation.''.
(2) Disregard of trust funds.--Section 1613(a) (42
U.S.C. 1382b(a)) is amended--
(A) by striking ``and'' at the end of
paragraph (10),
(B) by striking the period at the end of
paragraph (11) and inserting ``; and'', and
(C) by inserting after paragraph (11) the
following:
``(12) all amounts deposited in, or interest credited
to, a dedicated savings account described in section
1631(a)(2)(B)(xiv).''.
(3) Effective date.--The amendments made by this
subsection shall apply to payments made after the date
of the enactment of this Act.
SEC. 9604. DENIAL OF SSI BENEFITS BY REASON OF DISABILITY TO DRUG
ADDICTS AND ALCOHOLICS.
(a) In General.--Section 1614(a)(3) (42 U.S.C. 1382c(a)(3)),
as amended by section 9601(a)(3) of this Act, is amended by
adding at the end the following:
``(J) Notwithstanding subparagraph (A), an individual shall
not be considered to be disabled for purposes of this title if
alcoholism or drug addiction would (but for this subparagraph)
be a contributing factor material to the Commissioner's
determination that the individual is disabled.''.
(b) Conforming Amendments.--
(1) Section 1611(e) (42 U.S.C. 1382(e)) is amended by
striking paragraph (3).
(2) Section 1613(a)(12) (42 U.S.C. 1382b(a)(12)) is
amended by striking ``1631(a)(2)(B)(xiv)'' and
inserting ``1631(a)(2)(B)(xiii)''.
(3) Section 1631(a)(2)(A)(ii) (42 U.S.C.
1383(a)(2)(A)(ii)) is amended--
(A) by striking ``(I)''; and
(B) by striking subclause (II).
(4) Section 1631(a)(2)(B) (42 U.S.C. 1383(a)(2)(B))
is amended--
(A) by striking clause (vii);
(B) in clause (viii), by striking ``(ix)''
and inserting ``(viii)'';
(C) in clause (ix)--
(i) by striking ``(viii)'' and
inserting ``(vii)''; and
(ii) in subclause (II), by striking
all that follows ``15 years'' and
inserting a period;
(D) in clause (xiii)--
(i) by striking ``(xii)'' and
inserting ``(xi)''; and
(ii) by striking ``(xi)'' and
inserting ``(x)'';
(E) in clause (xiv) (as added by section
9603(b)(1) of this Act), by striking ``(x)''
and inserting ``(ix)''; and
(F) by redesignating clauses (viii) through
(xiv) as clauses (vii) through (xiii),
respectively.
(5) Section 1631(a)(2)(D)(i)(II) (42 U.S.C.
1383(a)(2)(D)(i)(II)) is amended by striking all that
follows ``$25.00 per month'' and inserting a period.
(6) Section 1634 (42 U.S.C. 1383c) is amended by
striking subsection (e).
(7) Section 201(c)(1) of the Social Security
Independence and Program Improvements Act of 1994 (42
U.S.C. 425 note) is amended--
(A) by striking ``--'' and all that follows
through ``(A)'' the 1st place such term
appears;
(B) by striking ``and'' the 3rd place such
term appears;
(C) by striking subparagraph (B);
(D) by striking ``either subparagraph (A) or
subparagraph (B)'' and inserting ``the
preceding sentence''; and
(E) by striking ``subparagraph (A) or (B)''
and inserting ``the preceding sentence''.
(c) Effective Date.--The amendments made by this section
shall take effect on October 1, 1995, and shall apply with
respect to months beginning on or after such date.
(d) Funding of Certain Programs for Drug Addicts and
Alcoholics.--Out of any money in the Treasury of the United
States not otherwise appropriated, the Secretary of the
Treasury shall pay to the Director of the National Institute on
Drug Abuse--
(1) $95,000,000, for each of fiscal years 1997, 1998,
1999, and 2000, for expenditure through the Federal
Capacity Expansion Program to expand the availability
of drug treatment; and
(2) $5,000,000 for each of fiscal years 1997, 1998,
1999, and 2000 to be expended solely on the medication
development project to improve drug abuse and drug
treatment research.
SEC. 9605. DENIAL OF SSI BENEFITS FOR 10 YEARS TO INDIVIDUALS FOUND TO
HAVE FRAUDULENTLY MISREPRESENTED RESIDENCE IN ORDER
TO OBTAIN BENEFITS SIMULTANEOUSLY IN 2 OR MORE
STATES.
Section 1614(a) (42 U.S.C. 1382c(a)) is amended by adding at
the end the following:
``(5) An individual shall not be considered an eligible
individual for purposes of this title during the 10-year period
beginning on the date the individual is found by a State to
have made, or is convicted in Federal or State court of having
made, a fraudulent statement or representation with respect to
the place of residence of the individual in order to receive
benefits simultaneously from 2 or more States under programs
that are funded under part A of title IV, or title XIX of this
Act, the consolidated program of food assistance under chapter
2 of subtitle E of title XIV of the Omnibus Budget
Reconciliation Act of 1995, or the Food Stamp Act of 1977 (as
in effect before the effective date of such chapter), or
benefits in 2 or more States under the supplemental security
income program under title XVI of this Act.''.
SEC. 9606. DENIAL OF SSI BENEFITS FOR FUGITIVE FELONS AND PROBATION AND
PAROLE VIOLATORS.
(a) In General.--Section 1611(e) (42 U.S.C. 1382(e)), as
amended by section 9604(b)(1) of this Act, is amended by
inserting after paragraph (2) the following:
``(3) A person shall not be an eligible individual or
eligible spouse for purposes of this title with respect
to any month if, throughout the month, the person is--
``(A) fleeing to avoid prosecution, or
custody or confinement after conviction, under
the laws of the place from which the person
flees, for a crime, or an attempt to commit a
crime, which is a felony under the laws of the
place from which the person flees, or which, in
the case of the State of New Jersey, is a high
misdemeanor under the laws of such State; or
``(B) violating a condition of probation or
parole imposed under Federal or State law.''.
(b) Exchange of Information With Law Enforcement Agencies.--
Section 1631(e) of such Act (42 U.S.C. 1383(e)) is amended by
inserting after paragraph (3) the following:
``(4) Notwithstanding any other provision of law, the
Commissioner shall furnish any Federal, State, or local law
enforcement officer, upon the request of the officer, with the
current address of any recipient of benefits under this title,
if the officer furnishes the agency with the name of the
recipient and notifies the agency that--
``(A) the recipient--
``(i) is fleeing to avoid prosecution, or
custody or confinement after conviction, under
the laws of the place from which the person
flees, for a crime, or an attempt to commit a
crime, which is a felony under the laws of the
place from which the person flees, or which, in
the case of the State of New Jersey, is a high
misdemeanor under the laws of such State;
``(ii) is violating a condition of probation
or parole imposed under Federal or State law;
or
``(iii) has information that is necessary for
the officer to conduct the officer's official
duties;
``(B) the location or apprehension of the recipient
is within the official duties of the officer; and
``(C) the request is made in the proper exercise of
such duties.''.
Subtitle D--Supplemental Security Income
SEC. 9607 VERIFICATION OF ELIGIBILITY FOR CERTAIN SSI DISABILITY
BENEFITS.
Section 1631 (42 U.S.C. 1383) is amended by adding at the
end the following new subsection:
``(o)(1) Notwithstanding any other provision of law, if the
Commissioner of Social Security determines that an individual,
who is 18 years of age or older, is eligible to receive
benefits pursuant to section 1614(a)(3), the Commissioner
shall, at the time of the determination, either exempt the
individual from an eligibility review or establish a schedule
for reviewing the individual's continuing eligibility in
accordance with paragraph (2).
``(2)(A) The Commissioner shall establish a periodic review
with respect to the continuing eligibility of an individual to
receive benefits, unless the individual is exempt from review
under subparagraph (C) or is subject to a scheduled review
under subparagraph (B). A periodic review under this
subparagraph shall be initiated by the Commissioner not later
than 30 months after the date a determination is made that the
individual is eligible for benefits and every 30 months
thereafter, unless a waiver is granted under section 221(i)(2).
However, the Commissioner shall not postpone the initiation of
a periodic review for more than 12 months in any case in which
such waiver has been granted unless exigent circumstances
require such postponement.
``(B)(i) In the case of an individual, other than an
individual who is exempt from review under subparagraph (C) or
with respect to whom subparagraph (A) applies, the Commissioner
shall schedule a review regarding the individual's continuing
eligibility to receive benefits at any time the Commissioner
determines, based on the evidence available, that there is a
significant possibility that the individual may cease to be
entitled to such benefits.
``(ii) The Commissioner may establish classifications of
individuals for whom a review of continuing eligibility is
scheduled based on the impairments that are the basis for such
individuals' eligibility for benefits. A review of an
individual covered by a classification shall be scheduled in
accordance with the applicable classification, unless the
Commissioner determines that applying such schedule is
inconsistent with the purpose of this Act or the integrity of
the supplemental security income program.
``(C)(i) The Commissioner may exempt an individual from
review under this subsection, if the individual's eligibility
for benefits is based on a condition that, as a practical
matter, has no substantial likelihood of improving to a point
where the individual will be able to perform substantial
gainful activity.
``(ii) The Commissioner may establish classifications of
individuals who are exempt from review under this subsection
based on the impairments that are the basis for such
individuals' eligibility for benefits. Notwithstanding any such
classification, the Commissioner may, at the time of
determining an individual's eligibility, schedule a review of
such individual's continuing eligibility if the Commissioner
determines that a review is necessary to preserve the integrity
of the supplemental security income program.
``(3) The Commissioner may revise a determination made
under paragraph (1) and schedule a review under paragraph
(2)(B), if the Commissioner obtains credible evidence that an
individual may no longer be eligible for benefits or the
Commissioner determines that a review is necessary to maintain
the integrity of the supplemental security income program.
Information obtained under section 1137 may be used as the
basis to schedule a review.
``(4)(i) The requirements of sections 1614(a)(4) and 1633
shall apply to reviews conducted under this subsection.
``(ii) Such reviews may be conducted by the applicable
State agency or the Commissioner, whichever is appropriate.''.
modification to accelerate implementation of conrad continuing
disability review provision
At the end of section 841 of S. 840, insert after ``is
appropriate.'' the following:
``(5) Transition rule.--Not later than three months
after the date of enactment of this subsection, the
Commissioner shall establish a schedule for reviewing
the continuing eligibility of each individual receiving
benefits pursuant to section 1614(a)(3) on the date of
enactment and who is 18 years of age or older unless
such individual is exempt under subparagraph (2)(C).
Such reviews shall be scheduled under the procedures
set out in paragraph (2), except that the reviews shall
be scheduled so that the eligibility of one-third of
all such non-exempt individuals is reviewed within one
year after the date of enactment, the eligibility of
two-thirds of such non-exempt individuals is reviewed
within two years of the date of enactment, and all
remaining non-exempt individuals receiving benefits on
the date of enactment of this subsection who continue
receiving benefits shall have their eligibility
reviewed within three years of the date of enactment.
Each individual determined eligible to continue
receiving benefits in a review scheduled under this
paragraph shall, at the time of such determination, be
subject to paragraph (1).''.
Subtitle H--Treatment of Aliens
SEC. 9801. EXTENSION OF DEEMING OF INCOME AND RESOURCES UNDER TEA, SSI,
AND FOOD STAMP PROGRAMS.
(a) In General.--Except as provided in subsections (b) and
(c), in applying sections 407 and 1621 of the Social Security
Act and section 5(i) of the Food Stamp Act of 1977, the period
in which each respective section otherwise applies with respect
to an alien shall be extended through the date (if any) on
which the alien becomes a citizen of the United States (under
chapter 2 of title III of the Immigration and Nationality Act).
(b) Exception.--Subsection (a) shall not apply to an alien
if--
(1) the alien has been lawfully admitted to the
United States for permanent residence, has attained 75
years of age, and has resided in the United States for
at least 5 years;
(2) the alien--
(A) is a veteran (as defined in section 101
of title 38, United States Code) with a
discharge characterized as an honorable
discharge,
(B) is on active duty (other than active duty
for training) in the Armed Forces of the United
States, or
(C) is the spouse or unmarried dependent
child of an individual described in
subparagraph (A) or (B);
(3) the alien is the subject of domestic violence by
the alien's spouse and a divorce between the alien and
the alien's spouse has been initiated through the
filing of an appropriate action in an appropriate
court; or
(4) there has been paid with respect to the self-
employment income or employment of the alien, or of a
parent or spouse of the alien, taxes under chapter 2 or
chapter 21 of the Internal Revenue Code of 1986 in each
of 20 different calendar quarters.
(c) Hold Harmless for Medicaid Eligibility.--Subsection (a)
shall not apply with respect to determinations of eligibility
for benefits under a State plan approved under part A of title
IV of the Social Security Act or under the supplemental income
security program under title XVI of such Act but only insofar
as such determinations provide for eligibility for medical
assistance under title XIX of such Act.
(d) Execption for Aliens Receiving Benefit.--Subsection (a)
shall not apply with respect to determinations of eligibility
for a benefit for an alien receiving such a benefit on the date
of the enactment of the Common Sense Budget Act of 1996 who
otherwise continues to be eligible for and continues to receive
such benefit after such date.
(e) Rules Regarding Income and Resource Deeming Under TEA
Program.--Subpart 1 of part A of title IV of the Social
Security Act, as added by section 9101(a) of this Act, is
amended by adding at the end the following:
``SEC. 407. ATTRIBUTION OF SPONSOR'S INCOME AND RESOURCES TO ALIEN.
``(a) For purposes of determining eligibility for and the
amount of assistance under a State plan approved under this
part for an individual who is an alien lawfully admitted for
permanent residence or otherwise permanently residing in the
United States under color of law (including any alien who is
lawfully present in the United States as a result of the
application of the provisions of section 207(c) of the
Immigration and Nationality Act (or of section 203(a)(7) of
such Act prior to April 1, 1980), or as a result of the
application of the provisions of section 208 or 212(d)(5) of
such Act), the income and resources of any person who (as a
sponsor of such individual's entry into the United States)
executed an affidavit of support or similar agreement with
respect to such individual, and the income and resources of the
sponsor's spouse, shall be deemed to be the unearned income and
resources of such individual (in accordance with subsections
(b) and (c)) for a period of three years after the individual's
entry into the United States, except that this section is not
applicable if such individual is a dependent child and such
sponsor (or such sponsor's spouse) is the parent of such child.
``(b)(1) The amount of income of a sponsor (and his spouse)
which shall be deemed to be the unearned income of an alien for
any month shall be determined as follows:
``(A) the total amount of earned and unearned income
of such sponsor and such sponsor's spouse (if such
spouse is living with the sponsor) shall be determined
for such month;
``(B) the amount determined under subparagraph (A)
shall be reduced by an amount equal to the sum of--
``(i) the lesser of (I) 20 percent of the
total of any amounts received by the sponsor
and his spouse in such month as wages or salary
or as net earnings from self-employment, plus
the full amount of any costs incurred by them
in producing self-employment income in such
month, or (II) $175;
``(ii) the cash needs standard established by
the State under its plan for a family of the
same size and composition as the sponsor and
those other individuals living in the same
household as the sponsor who are claimed by him
as dependents for purposes of determining his
Federal personal income tax liability but whose
needs are not taken into account in making a
determination under section 402(d);
``(iii) any amounts paid by the sponsor (or
his spouse) to individuals not living in such
household who are claimed by him as dependents
for purposes of determining his Federal
personal income tax liability; and
``(iv) any payments of alimony or child
support with respect to individuals not living
in such household.
``(2) The amount of resources of a sponsor (and his spouse)
which shall be deemed to be the resources of an alien for any
month shall be determined as follows:
``(A) the total amount of the resources (determined
as if the sponsor were applying for assistance under
the State plan approved under this part) of such
sponsor and such sponsor's spouse (if such spouse is
living with the sponsor) shall be determined; and
``(B) the amount determined under subparagraph (A)
shall be reduced by $1,500.
``(c)(1) Any individual who is an alien and whose sponsor was
a public or private agency shall be ineligible for assistance
under a State plan approved under this part during the period
of three years after his or her entry into the United States,
unless the State agency administering such plan determines that
such sponsor either no longer exists or has become unable to
meet such individual's needs; and such determination shall be
made by the State agency based upon such criteria as it may
specify in the State plan, and upon such documentary evidence
as it may therein require. Any such individual, and any other
individual who is an alien (as a condition of his or her
eligibility for assistance under a State plan approved under
this part during the period of three years after his or her
entry into the United States), shall be required to provide to
the State agency administering such plan such information and
documentation with respect to his sponsor as may be necessary
in order for the State agency to make any determination
required under this section, and to obtain any cooperation from
such sponsor necessary for any such determination. Such alien
shall also be required to provide to the State agency such
information and documentation as it may request and which such
alien or his sponsor provided in support of such alien's
immigration application.
``(2) The Secretary shall enter into agreements with the
Secretary of State and the Attorney General whereby any
information available to them and required in order to make any
determination under this section will be provided by them to
the Secretary (who may, in turn, make such information
available, upon request, to a concerned State agency), and
whereby the Secretary of State and Attorney General will inform
any sponsor of an alien, at the time such sponsor executes an
affidavit of support or similar agreement, of the requirements
imposed by this section.
``(d) Any sponsor of an alien, and such alien, shall be
jointly and severally liable for an amount equal to any
overpayment of assistance under the State plan made to such
alien during the period of three years after such alien's entry
into the United States, on account of such sponsor's failure to
provide correct information under the provisions of this
section, except where such sponsor was without fault, or where
good cause of such failure existed. Any such overpayment which
is not repaid to the State or recovered in accordance with the
procedures generally applicable under the State plan to the
recoupment of overpayments shall be withheld from any
subsequent payment to which such alien or such sponsor is
entitled under any provision of this Act.
``(e)(1) In any case where a person is the sponsor of two or
more alien individuals who are living in the same home, the
income and resources of such sponsor (and his spouse), to the
extent they would be deemed the income and resources of any one
of such individuals under the preceding provisions of this
section, shall be divided into two or more equal shares (the
number of shares being the same as the number of such alien
individuals) and the income and resources of each such
individual shall be deemed to include one such share.
``(2) Income and resources of a sponsor (and his spouse)
which are deemed under this section to be the income and
resources of any alien individual in a family shall not be
considered in determining the need of other family members
except to the extent such income or resources are actually
available to such other members.
``(f) The provisions of this section shall not apply with
respect to any alien who is--
``(1) admitted to the United States as a result of
the application, prior to April 1, 1980, of the
provisions of section 203(a)(7) of the Immigration and
Nationality Act;
``(2) admitted to the United States as a result of
the application, after March 31, 1980, of the
provisions of section 207(c) of such Act;
``(3) paroled into the United States as a refugee
under section 212(d)(5) of such Act;
``(4) granted political asylum by the Attorney
General under section 208 of such Act; or
``(5) a Cuban and Haitian entrant, as defined in
section 501(e) of the Refugee Education Assistance Act
of 1980 (Public Law 96-422).'.
SEC. 9802. REQUIREMENTS FOR SPONSOR'S AFFIDAVITS OF SUPPORT.
(a) In General.--Title II of the Immigration and Nationality
Act is amended by inserting after section 213 the following new
section:
``requirements for sponsor's affidavit of support
``Sec. 213A. (a) Enforceability.--
``(1) In general.--No affidavit of support may be
accepted by the Attorney General or by any consular
officer to establish that an alien is not excludable
under section 212(a)(4) unless such affidavit is
executed as a contract--
``(A) which is legally enforceable against
the sponsor by the Federal Government, by a
State, or by any political subdivision of a
State, providing cash benefits under a public
cash assistance program (as defined in
subsection (f)(2)), but not later than 5 years
after the date the alien last receives any such
cash benefit; and
``(B) in which the sponsor agrees to submit
to the jurisdiction of any Federal or State
court for the purpose of actions brought under
subsection (e)(2).
``(2) Expiration of liability.--Such contract shall
only apply with respect to cash benefits described in
paragraph (1)(A) provided to an alien before the
earliest of the following:
``(A) Citizenship.--The date the alien
becomes a citizen of the United States under
chapter 2 of title III.
``(B) Veteran.--The first date the alien is
described in section 9801(b)(2)(A) of the
Omnibus Budget Reconciliation Act of 1995.
``(C) Payment of social security taxes.--The
first date as of which the condition described
in section 9801(b)(4) of the Omnibus Budget
Reconciliation Act of 1995 is met with respect
to the alien.
``(3) Nonapplication during certain periods.--Such
contract also shall not apply with respect to cash
benefits described in paragraph (1)(A) provided during
any period in which the alien is described in section
9801(b)(2)(B) or 9801(b)(2)(C) of the Omnibus Budget
Reconciliation Act of 1995.
``(b) Forms.--Not later than 90 days after the date of
enactment of this section, the Attorney General, in
consultation with the Secretary of State and the Secretary of
Health and Human Services, shall formulate an affidavit of
support consistent with the provisions of this section.
``(c) Notification of Change of Address.--
``(1) Requirement.--The sponsor shall notify the
Federal Government and the State in which the sponsored
alien is currently resident within 30 days of any
change of address of the sponsor during the period
specified in subsection (a)(1)(A).
``(2) Enforcement.--Any person subject to the
requirement of paragraph (1) who fails to satisfy such
requirement shall be subject to a civil penalty of--
``(A) not less than $250 or more than $2,000,
or
``(B) if such failure occurs with knowledge
that the sponsored alien has received any
benefit under any means-tested public benefits
program, not less than $2,000 or more than
$5,000.
``(d) Reimbursement of Government Expenses.--
``(1) Request for reimbursement.--
``(A) In general.--Upon notification that a
sponsored alien has received any cash benefits
described in subsection (a)(1)(A), the
appropriate Federal, State, or local official
shall request reimbursement by the sponsor in
the amount of such cash benefits.
``(B) Regulations.--The Attorney General, in
consultation with the Secretary of Health and
Human Services, shall prescribe such
regulations as may be necessary to carry out
subparagraph (A).
``(2) Initiation of action.--If within 45 days after
requesting reimbursement, the appropriate Federal,
State, or local agency has not received a response from
the sponsor indicating a willingness to commence
payments, an action may be brought against the sponsor
pursuant to the affidavit of support.
``(3) Failure to abide by repayment terms.--If the
sponsor fails to abide by the repayment terms
established by such agency, the agency may, within 60
days of such failure, bring an action against the
sponsor pursuant to the affidavit of support.
``(4) Limitation on actions.--No cause of action may
be brought under this subsection later than 5 years
after the date the alien last received any cash benefit
described in subsection (a)(1)(A).
``(f) Definitions.--For the purposes of this section:
``(1) Sponsor.--The term `sponsor' means an
individual who--
``(A) is a citizen or national of the United
States or an alien who is lawfully admitted to
the United States for permanent residence;
``(B) is 18 years of age or over; and
``(C) is domiciled in any State.
``(2) Public cash assistance program.--The term
`public cash assistance program' means a program of the
Federal Government or of a State or political
subdivision of a State that provides direct cash
assistance for the purpose of income maintenance and in
which the eligibility of an individual, household, or
family eligibility unit for cash benefits under the
program, or the amount of such cash benefits, or both
are determined on the basis of income, resources, or
financial need of the individual, household, or unit.
Such term does not include any program insofar as it
provides medical, housing, education, job training,
food, or in-kind assistance or social services.''.
(b) Clerical Amendment.--The table of contents of such Act is
amended by inserting after the item relating to section 213 the
following:
``Sec. 213A. Requirements for sponsor's affidavit of support.''.
(c) Effective Date.--Subsection (a) of section 213A of the
Immigration and Nationality Act, as inserted by subsection (a)
of this section, shall apply to affidavits of support executed
on or after a date specified by the Attorney General, which
date shall be not earlier than 60 days (and not later than 90
days) after the date the Attorney General formulates the form
for such affidavits under subsection (b) of such section 213A.
SEC. 9803. EXTENDING REQUIREMENT FOR AFFIDAVITS OF SUPPORT TO FAMILY-
RELATED AND DIVERSITY IMMIGRANTS.
(a) In General.--Section 212(a)(4) of the Immigration and
Nationality Act (8 U.S.C. 1182(a)(4)) is amended to read as
follows:
``(4) Public charge and affidavits of support.--
``(A) Public charge.--Any alien who, in the
opinion of the consular officer at the time of
application for a visa, or in the opinion of
the Attorney General at the time of application
for admission or adjustment of status, is
likely at any time to become a public charge is
excludable.
``(B) Affidavits of support.--Any immigrant
who seeks admission or adjustment of status as
any of the following is excludable unless there
has been executed with respect to the immigrant
an affidavit of support pursuant to section
213A:
``(i) As an immediate relative (under
section 201(b)(2)).
``(ii) As a family-sponsored
immigrant under section 203(a) (or as
the spouse or child under section
203(d) of such an immigrant).
``(iii) As the spouse or child (under
section 203(d)) of an employment-based
immigrant under section 203(b).
``(iv) As a diversity immigrant under
section 203(c) (or as the spouse or
child under section 203(d) of such an
immigrant).''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to aliens with respect to whom an immigrant visa is
issued (or adjustment of status is granted) after the date
specified by the Attorney General under section 9802(c)
SEC. 6102. REDUCTION IN TITLE XX BLOCK GRANTS TO STATES FOR SOCIAL
SERVICES.
Section 2003(c) of the Social Security Act (42 U.S.C.
1397b(c)) is amended--
(1) by striking ``and'' at the end of paragraph (4);
(2) in paragraph (5), by striking ``fiscal year after
fiscal year 1989.'' and inserting ``of fiscal years
1990 through 1995; and''; and
(3) by adding at the end the following:
``(6) $2,520,000,000 for fiscal year 1996 and each
succeeding fiscal year.''.
PART 1--FOOD STAMPS
Short Title
Sec. 12001. This part may be cited as ``The Food Stamp Act
Amendments of 1995''.
include minor children under 18 years old in their parents' households
Sec. 12011. Section 3(i) of the Food Stamp Act of 1997 (7
U.S.C. 2012(i)) is amended by striking the first parenthetical
phrase in the second sentence and inserting in lieu thereof--
``(except children who have reached the age of 18 and are
themselves parents living with their children or married and
living with their spouses)''.
use the cost of the thrifty food plan for allotment adjustments
Sec. 12012. Section 3(o) of the Food Stamp Act of 1977 (7
U.S.C. 2012(o)) is amended by--
(1) inserting in paragraph (11) of the second
sentence immediately following ``and each October 1
thereafter,'' the words ``through the last day of the
first month after the month of enactment of the
Balanced Budget Act of 1995 for Economic Growth and
Fairness''; and
(2) inserting a new third sentence as follows--
``On the first day of the second month after
the month of enactment of the Balanced Budget
Act of 1995 for Economic Growth and Fairness
and each October 1 thereafter, adjust the cost
of the diet to reflect the cost of the diet, in
the preceding June, and round the result to the
nearest lower dollar increment for each
household size, except that on the first day of
the second month after the month of enactment
of the Balanced Budget Act of 1995 for Economic
Growth and Fairness, the Secretary may not
reduce the cost of the diet in effect on
September 30, 1995.''.
lower age for excluding students' earnings
Sec. 12013. Section 5(d)(7) of the Food Stamp Act of 1977
(7 U.S.C. 2014(d)(7)) is amended by striking ``is 21 years of
age or younger'' and inserting ``has not reached the age of
18''.
count governmental energy assistance as income
Sec. 12014. (a) Section 5(d) of the Food Stamp Act of 1977
(7 U.S.C. 2014(d)) is amended by striking paragraph (11) and
renumbering paragraphs (12) through (16) as paragraphs (11)
through (15), respectively.
(b) Section 5(e) of the Food Stamp Act of 1977 (7 U.S.C.
2014(e)) is amended by striking ``If a State agency elects''
and all that follows through ``season for which it was
provided.''.
(c) Section 5(k) of the Food Stamp Act of 1977 (7 U.S.C.
2014(k)) is amended--
(1) in paragraph (1)(B), by striking ``, not
including energy or utility-cost assistance,'';
(2) in paragraph (2), by striking subparagraph (C);
and
(3) by adding at the end the following--
``(4)(A) For purposes of subsection (d)(1), a
payment made under a Federal or State law to
provide energy assistance to a household shall
be considered money payable directly to the
household.
``(B) For purposes of subsection (e), an
expense paid on behalf of a household under a
Federal or State law to provide energy
assistance shall be considered an out-of-pocket
expense incurred and paid by the household.''.
(d) Section 2605(f) of the Low-Income Home Energy
Assistance Act of 1981 (42 U.S.C. 8624(f)) is amended--
(1) by striking ``(1) Notwithstanding any other
provision of law unless'' and inserting
``Notwithstanding any other provision of law except the
Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.), and
any'';
(2) in paragraph (1), by striking ``food stamps,'';
and (3) by striking paragraph (2).
reduce the standard deduction
Sec. 12015. Section 5(e) of the Food Stamp Act of 1977 (7
U.S.C. 2014(e)) is amended by striking the first two sentences
and inserting in lieu thereof the following--``The Secretary
shall allow a standard deduction for each household in the 48
contiguous States and the District of Columbia, Alaska, Hawaii,
Guam, and the Virgin Islands of the United States of--
``for fiscal year 1995, $134, $ , $ , $ , and $
, respectively;
``(i) for fiscal year 1996, $130, $ , $ , $ ,
and $ , respectively;
``(ii) for fiscal year 1997, $115, $ , $ , $ ,
and $ , respectively; and
``(iii) on October 1, 1997, and each October 1
thereafter, the Secretary shall adjust the standard
deduction to the nearest lower dollar increment to
reflect changes in the Consumer Price Index for all
urban consumers published by the Bureau of Labor
Statistics, for items other than food, for the 12-month
period ending the preceding June 30.''.
make mandatory use of standard utility allowances a state option
Sec. 12016. Section 5(e) of the Food Stamp Act of 1977 (7
U.S.C. 2014(e)) is amended by inserting immediately before ``No
such allowance may be used'' the following new sentence--``A
State agency may make the use of a standard utility allowance
mandatory for all households with qualifying utility costs if
(1) the State agency has developed one or more standards that
include the cost of heating and cooling and one or more
standards that do not include the cost of heating and cooling;
and (2) the Secretary finds that the standards will not result
in increased program costs.''.
freeze amount of vehicle asset limitation
Sec. 12017. The first sentence of section 5(g)(2) of the
Food Stamp Act of 1977 (7 U.S.C. 2014(g)(2)) is amended by
striking ``through September 30, 1995'' and all that follows
through ``such date and on'' and inserting ``and shall be
adjusted on October 1, 1996, and''.
require cooperation with child support enforcement agencies at state
option
Sec. 12018. (a) Section 6 of the Food Stamp Act of 1977 (7
U.S.C. 2015) is amended by adding new subsections (i) and (j)
at the end thereof as follows--``(i) At the option of the
State, no natural or adoptive parent or other individual who is
living with and exercising parental control over a child under
the age of eighteen who has an absent parent shall be eligible
to participate in the food stamp program unless such parent or
individual cooperates with the State agency administering the
program under part D of title IV of the Social Security Act (or
is determined by such State agency to have good cause not to
cooperate) in (1) establishing the paternity of such child (if
born out of wedlock), and (2) obtaining support for such child
or for herself/himself and for such child. Notwithstanding any
provision of part D of title IV of the Social Security Act, no
person required under this subsection to cooperate with the
State agency administering the program under part D of title IV
of the Social Security Act may be required to pay a fee or
other costs for services provided under such program.''.
``(j) At the option of the State agency, no person who
fails to make legally obligated child support payments shall be
eligible to participate in the food stamp program unless such
person is unemployed or establishes that the child support
award is inconsistent with applicable guidelines.''.
facilitate implementation of a national electronic benefit transfer
delivery system
Sec. 12019. Section 7 of the Food Stamp Act of 1977 (7
U.S.C. 2016) is amended by--
(1) striking in subsection (g) ``(1)'';
(2) striking paragraph (g)(2); and
(3) striking in subsection (g) ``(A)'' and ``(B)''
and inserting in lieu thereof ``(1)'' and ``(2)'',
respectively.
repeal minimum benefit adjustments
Sec. 12020. Section 8(a) of the Food Stamp Act of 1977 (7
U.S.C. 2017(a)) is amended by striking in the proviso ``, and
shall be adjusted'' and all that follows through ``$5''.
prorate benefits on recertification
Sec. 12021. Section 8(c)(2)(B) of the Food Stamp Act of
1977 (7 U.S.C. 2017(c)(2)(B)) is amended by striking ``of more
than one month''.
prohibit allotment increases for penalties under other welfare and
public assistance programs
Sec. 12022. Section 8 of the Food Stamp Act of 1977 (7
U.S.C. 2017) is amended by striking subsection (d) and
inserting in lieu thereof the following--``(d) If the benefits
of a household are reduced under a Federal, State, or local law
relating to a welfare or public assistance program because of a
penalty or for the failure to perform an action required under
the law or program, for the duration of the reduction the
household may not receive an increased allotment as the result
of a decrease in the income of the household to the extent that
the decrease is the result of the reduction.''.
permit states to determine most useful and reliable means of
verification
Sec. 12023. Section 11 of the Food Stamp Act of 1977 (7
U.S.C. 2020) is amended by--
(1) striking in subsection (e)(3) all that follows
``, and that the State agency shall'' through ``(E)'';
(2) inserting after the paragraph designation (19) of
subsection (e) ``at the option of the State agency,'';
and
(3) by adding at the end thereof the following new
subsection--
``(p) Notwithstanding any other provision of
law, State agencies (described in section
3(n)(1) of this Act) shall not be required to
use an income and eligibility verification
system established under section 1137 of the
Social Security Act (42 U.S.C. 1320b-7) or the
immigration status verification system
established under section 1137(d) of the Social
Security Act (42 U.S.C. 1320b-71d)).''.
expand claims collection methods
Sec. 12024. (a) Section 11(e)(8) of the Food Stamp Act of
1977 (7 U.S.C. 2020(e)(8)) is amended by inserting before the
semicolon at the end thereof the following--``or refunds of
Federal taxes as authorized pursuant to 31 U.S.C. 3720A''.
(b) Section 13 of the Food Stamp Act of 1977 (7 U.S.C.
2022) is amended by--
(1) striking paragraph (1) of subsection (b);
(2) redesignating subparagraph (A) of paragraph
(b)(2) as paragraph (b)(1);
(3) striking in paragraph (b)(1), as redesignated by
this subsection, ``, other than claims the collection
of which is provided for in paragraph (1) of this
subsection and claims arising from an error of the
State agency,'';
(4) inserting at the end of paragraph (b)(1), as
redesignated by this subsection, the following new
sentence--``A State agency may waive the use of
allotment reduction as a means of collecting a claim
arising from an error of the State agency if su8ch
collection would cause a hardship (as defined by the
State agency) on the household but shall continue to
pursue all other lawful methods of collection of such
claims as prescribed in subsection (b)(2).'';
(5) striking in paragraph (b)(1), as redesignated by
this subsection, ``, except that the household shall''
and inserting in lieu thereof ``. At the option of the
State, the household may'';
(6) redesignating subparagraph (b)(2)(B) as paragraph
(b)(2);
(7) striking in paragraph (b)(2), as redesignated by
this subsection, ``or subparagraph (A)'';
(8) striking in subsection (d) ``and except for
claims arising from an error of the State agency,'';
(9) striking in subsection (d) ``may'' and inserting
in lieu thereof ``shall''; and
(10) inserting before the period at the end of
subsection (d) the following--``or refunds of Federal
taxes as authorized pursuant to 31 U.S.C. 3720A''.
(c) Section 16(a) of the Food Stamp Act of 1977 (7 U.S.C.
2025(a)) is amended by striking ``25 percent during the period
beginning October 1, 1990'' and all that follows through
``error of a State agency.'' and inserting in lieu thereof the
following--``25 percent of overissuances, except those arising
from an error of the State agency, which are recovered or
collected pursuant to subsections (b), (c), and (d) of section
13.''.
(d) Section 6402(d) of the Internal Revenue Code (26 U.S.C.
6402(d)) is amended by--
(1) inserting in paragraph (1) immediately following
``any Federal agency'' the following--
``(or any State agency that has the
responsibility for the administration of the
food stamp program operated pursuant to the
Food Stamp Act of 1977)''; and
(inserting in the second sentence of paragraph (2)
immediately following ``a Federal agency'' the
following--
``(or a State agency that has the
responsibility for the administration of the
food stamp program operated pursuant to the
Food Stamp Act of 1977)''.
EFFECTIVE DATES
Sec. 12025. Except as otherwise provided in this part, the
provisions of this part shall become effective the first day of
the second month after the month of enactment.
PART 2--CHILD NUTRITION
IMPROVED TARGETING OF DAY CARE HOME REIMBURSEMENTS
Sec. 12031. (a) Restructured Day Care Home
Reimbursements.--Section 17(f)(3) of the National School Lunch
Act (42 U.S.C. 1766(f)(3)) is amended by striking ``(3)(A)
Institutions'' and all that follows through the end of
subparagraph (A) and inserting the following--
``(3) Reimbursement of family or group day care home
sponsoring organizations.--
``(A) Reimbursement factor.--
``(i) In general.--An institution
that participates in the program under
this section as a family or group day
care home sponsoring organization shall
be provided, for payment to a home
sponsored by the organization,
reimbursement factors in accordance
with this subparagraph for the cost of
obtaining and preparing food and
prescribed labor costs involved in
providing meals under this section.
``(ii) Tier i family or group day
care homes.--
``(I) Definition.--In this
paragraph, the term `tier I
family or group day care home'
means--
``(aa) a family or
group day care home
that is located in a
geographic area, as
defined by the
Secretary based on
census data, in which
at least 50 percent of
the children residing
in the area are members
of households whose
incomes meet the income
eligibility guidelines
for free or reduced
price meals under
section 9;
``(bb) a family or
group day care home
that is located in an
area served by a school
enrolling elementary
students in which at
least 50 percent of the
total number of
children enrolled are
certified eligible to
receive free or reduced
price school meals
under this Act or the
Child Nutrition Act of
1966 (42 U.S.C. 1771 et
seq.); or
``(cc) a family or
group day care home
that is operated by a
provider whose
household meets the
eligibility
requirements for free
or reduced price meals
under section 9 and
whose eligibility is
verified by the
sponsoring organization
of the home under
regulations established
by the Secretary.
``(II) Reimbursement.--Except
as provided in subclause (III),
a tier I family or group day
care home shall be provided
reimbursement factors under
this clause without a
requirement for documentation
of the costs described in
clause (i), except that
reimbursement shall not be
provided under this subclause
for meals or supplements served
to the children of a person
acting as a family or group day
care home provider unless the
children meet the eligibility
requirements for free or
reduced price meals under
section 9.
``(III) Factors.--Except as
provided in subclause (IV), the
reimbursement factors applied
to a home referred to in
subclause (II) shall be the
factors in effect on the date
of enactment of this subclause.
``(IV) Adjustments.--The
reimbursement factors under
this subparagraph shall be
adjusted on October 1, 1996,
July 1, 1997, and each July 1
thereafter, to reflect changes
in the Consumer Price Index for
food at home for the most
recent 12-month period for
which the data are available.
The reimbursement factors under
this subparagraph shall be
rounded to the nearest lower
cent increment and based on the
unrounded adjustment in effect
on June 30 of the preceding
school year.
``(iii) Tier ii family or group day
care homes.--
``(I) In general.--
``(aa) Factors.--
Except as provided in
subclause (II), with
respect to meals or
supplements served
under this clause by a
family or group day
care home that does not
meet the criteria set
forth in clause
(ii)(I), the
reimbursement factors
shall be $1 for lunches
and suppers, 30 cents
for breakfasts, and 15
cents for supplements.
``(bb) Adjustments.--
The factors shall be
adjusted on July 1,
1997, and each July 1
thereafter, to reflect
changes in the Consumer
Price Index for food at
home for the most
recent 12-month period
for which the data are
available. The
reimbursement factors
under this item shall
be rounded down to the
nearest lower cent
increment and based on
the unrounded
adjustment for the
preceding 12-month
period.
``(cc)
Reimbursement.--A
family or group day
care home shall be
provided reimbursement
factors under this
subclause without a
requirement for
documentation of the
costs described in
clause (i), except that
reimbursement shall not
be provided under this
subclause for meals or
supplements served to
the children of a
person acting as a
family or group day
care home provider
unless the children
meet the eligibility
requirements for free
or reduced price meals
under section 9.
``(II) Other factors.--A
family or group day care home
that does not meet the criteria
set forth in clause (ii)(I) may
elect to be provided
reimbursement factors
determined in accordance with
the following requirements:
``(aa) Children
eligible for free or
reduced price meals.--
In the case of meals or
supplements served
under this subsection
to children who meet
the eligibility
requirements for free
or reduced price meals
under section 9, the
family or group day
care home shall be
provided reimbursement
factors set by the
Secretary in accordance
with clause (ii)(III).
``(bb) Ineligible
children.--In the case
of meals or supplements
served under this
subsection to children
who do not meet the
eligibility
requirements for free
or reduced priced meals
under section 9, the
family or group day
care home shall be
provided reimbursement
factors in accordance
with subclause (I).
``(III) Information and
determinations.--
``(aa) In general.--
If a family or group
day care home elects to
claim the factors
described in subclause
(II), the family or
group day care home
sponsoring organization
serving the home shall
collect the necessary
eligibility
information, as
determined by the
Secretary, from any
parent or other
caretaker to make the
determinations
specified in subclause
(II) and shall make the
determinations in
accordance with rules
prescribed by the
Secretary.
``(bb) Categorical
Eligibility--In making
a determination under
item (aa), a family or
group day care home
sponsoring organization
may consider a child
participating in or
subsidized under, or a
child with a parent
participating in or
subsidized under, a
federally or State
supported child care or
other benefit program
with an income
eligibility limit that
does not exceed the
income eligibility
guidelines for free or
reduced price meals
under section 9 to be a
child who is eligible
for free or reduced
price meals under
section 9.
``(cc) Factors for
children only.--A
family or group day
care home may elect to
receive the
reimbursement factors
prescribed under clause
(ii) (III) solely for
the children
participating in a
program referred to in
item (bb) if the home
elects not to have
eligibility information
collected from parents
or other caretakers.''.
(b) Grants to States To Provide Assistance to Family or
Group Day Care Homes.--Section 17(f)(3) of the National School
Lunch Act (42 U.S.C. 1766(f)(3)) is amended by adding at the
end the following--
``(D) Grants to
states to provide
assistance to family or
group day care homes.--
``(i) In general.--
``(I) Reservation.--The Secretary
shall reserve $5,000,000 of the amount
made available to carry out this
section for fiscal year 1996.
``(II) Purpose.--The Secretary shall
use the funds made available under
subclause (I) to provide grants to
States for the purpose of providing--
``(aa) assistance, including
grants, to family or group day
care home sponsoring
organizations and other
appropriate organization, in
securing and providing
training, materials, automated
data processing assistance, and
other assistance for the staff
of the sponsoring
organizations; and
``(bb) training and other
assistance to family or group
day care homes in the
implementation of the
amendments to subparagraph (A)
made by section 12031(a) of the
Balanced Budget Act of 1995 for
Economic Growth and Fairness.
``(ii) Allocation.--The Secretary shall
allocate from the funds reserved under clause
(i)(I)--
``(I) $30,000 in base funding to each
State; and
``(II) any remaining amount among the
States, based on the number of family
or group day case homes participating
in the program in a State during fiscal
year 1994 as a percentage of the number
of all family or group day care homes
participating in the program during
fiscal year 1994.
``(iii) Retention of funds.--of the amount of
funds made available to a State for fiscal year
1996 under clause (i), the State may retain not
to exceed 30 percent of the amount to carry out
this subparagraph.
``(iv) Additional payments.--Any payments
received under this subparagraph shall be in
addition to payments that a State receives
under subparagraph (A) (as amended by section
12031(a) of the Balanced Budget Act of 1995 for
Economic Growth and Fairness).''.
(c) Provision of Data.--Section 17(f)(3) of the National
School Lunch Act (42 U.S.C. 1766(f)(3)), as amended by
subsection (b), is further amended by adding at the end the
following--
``(E) Provision of data to family or group day care
home sponsoring organizations.--
``(i) Census data.--The Secretary shall
provide to each State agency administering a
child and adult care food program under this
section data from the most recent decennial
census survey or other appropriate census
survey for which the data are available showing
which areas in the State meet the requirements
of subparagraph (A)(ii)(I)(aa). The State
agency shall provide the data to family or
group day care home sponsoring organizations
located in the State.
``(ii) School data.--
``(I) In general.--A State agency
administering the school lunch program
under this Act or the school breakfast
program under the Child Nutrition Act
of 1966 (42 U.S.C. 1771 et seq.) shall
provide data for each elementary school
in the State, or shall direct each
school within the State to provide data
for the school, to approved family or
group day care home sponsoring
organizations that request the data, on
the percentage of enrolled children who
are certified eligible for free or
reduced price meals.
``(II) Use of data from preceding
school year.--In determining for a
fiscal year or other annual period
whether a home qualifies as a tier I
family or group day care home under
subparagraph (A)(ii)(I), the State
agency administering the program under
this section, and a family or group day
care home sponsoring organization,
shall use the most current available
data at the time of the determination.
``(iii) Duration of determination.--For
purposes of this section, a determination that
a family or group day care home is located in
an area that qualifies the home as a tier I
family or group day care home (as the term is
defined in subparagraph (A)(ii)(I)), shall be
in effect for 3 years (unless the determination
is made on the basis of census data, in which
case the determination shall remain in effect
until more recent census data are available)
unless the State agency determines that the
area in which the home is located no longer
qualifies the home as a tier I family or group
day care home.''.
(d) Conforming Amendments.--Section 17(c) of the National
School Lunch Act (42 U.S.C. 1766(c)) is amended by inserting
``except as provided in subsection (f)(3),'' after ``For
purposes of this section,'' each place it appears in paragraphs
(1), (2), and (3).
(e) Effective Date.--
(1) In general.--Except as provided in paragraph (2),
the amendments made by this section shall become
effective on the date of enactment of this part.
(2) Improved targeting of day care home
reimbursements.--The amendments made by subsections
(a), (c), and (d) shall become effective on October 7,
1996.
SEC. . REIMBURSEMENT RATE ADJUSTMENTS.
(a) In general.--
(1) Commodity rate.--Section 6(a)(1)(B) of the
National School Lunch Act (42 U.S.C. 1755(g)(1)(M) is
amended by striking ``\1/4\ cent'' and inserting
``lower cent increment''.
(2) Lunch, breakfast and supplement rates.--Section
11(a)(3)(b) of the National School Lunch Act (42 U.S.C.
1759a(a)(3)(B)) is amended by striking ``one fourth
cent'' and inserting ``lower cent increment''.
(3) Summer program rates.--Section 13(b)(1) of the
National School Lunch Act (42 U.S.C. 1761(b)(1)) is
amended by striking ``one-fourth cent'' and inserting
``lower cent increment''.
(4) Family day care rates.--Section 17(f)(3(A) of the
National School Lunch Act (42 U.S.C. 1766(f)(3)(A)) is
amended in the last sentence by striking ``one-fourth
cent'' and inserting ``lower cent increment''.
(5) Special milk program rates.--Section 3(a)(8) of
the Child Nutrition Act (42 U.S.C. 1772(a)(8)) is
amended by striking ``one-fourth cent'' and inserting
``lower cent increment''.
(6) Severe need rates.--Section 4(b)(2)(B)(ii) of the
Child Nutrition Act (42 U.S.C. 1773(b)(B)(ii)) is
amended by striking ``one-fourth cent'' and inserting
``lower cent increment''.
(b) Effective dates.--The amendments made by subsection (a)
shall become effective on July 1, 1996.
SEC. . ELIMINATION OF START-UP AND EXPANSION GRANTS.
(a) Section 4 of the Child Nutrition Act (42 U.S.C. 1773)
is amended by striking subsection (g).
(b) The amendment made by this subsection (a) shall become
effective on October 1, 1996.
SEC. . AUTHORIZATION OF APPROPRIATIONS.
Section 19(i) of the Child Nutrition Act (42 U.S.C.
1788(i)) is amended--
(a) in the first sentence of paragraph (2)(A), by
striking ``and each succeeding fiscal year'';
(b) by redesignating paragraphs (3) and (4) as
paragraphs (4) and (5), respectively; and
(c) by inserting after paragraph (2) the following:
``(3) fiscal years 1997 through 2002--
``(A) In general.--There are authorized to be
appropriated to carry out this section
$10,000,00 for each of the fiscal years 1997
through 2002.
``(B) Grants.--
``(i)'' In general.--Grants to each
State from the amounts made available
under subparagraph (A) shall be based
on a rate of 50 cents for each child
enrolled in schools or institutions
within the State, except that no State
shall * * * an amount less than $75,000
per fiscal year.
``(ii) Insufficient funds.--If an
amount made available for any fiscal
year is insufficient to pay the amount
to which each State is entitled under
clause (i), the amount of each grant
shall be ratably reduced.''
SEC. 12035. DIRECT FEDERAL EXPENDITURES.
(a) Commodity Assistance.--
(1) Section 6(g) of the National School Lunch Act (42
U.S.C. 1755(g)) is amended by striking ``12 percent''
and inserting ``8 percent''.
Title X--Food Stamps and Commodity Distribution
SEC. 1001. SHORT TITLE.
This title may be cited as the ``Food Stamp Reform and
Commodity Distribution Act of 1995''.
Subtitle A--Food Stamp Program
SEC. 1011. DEFINITION OF CERTIFICATION PERIOD.
Section 3(c) of the Food Stamp Act of 1977 (7 U.S.C.
2012(c)) is amended by striking ``Except as provided'' and all
that follows and inserting the following: ``The certification
period shall not exceed 12 months, except that the
certification period may be up to 24 months if all adult
household members are elderly or disabled. A State agency shall
have at least 1 contact with each certified household every 12
months''.
SEC. 1012. DEFINITION OF COUPON.
Section 3(d) of the Food Stamp Act of 1977 (7 U.S.C.
2012(d)) is amended by striking ``or type of certificate'' and
inserting ``type of certificate, authorization card, cash or
check issued in lieu of a coupon, or an access device,
including an electronic benefit transfer card or personal
identification number,''.
SEC. 1016. DEFINITION OF HOMELESS INDIVIDUAL.
Section 3(s)(2)(C) of the Food Stamp Act of 1977 (7 U.S.C.
2012(s)(2)(C)) is amended by inserting ``for not more than 90
days'' after ``temporary accommodation''.
SEC. 1017. STATE OPTION FOR ELIGIBILITY STANDARDS.
Section 5(b) of the Food Stamp Act of 1977 (7 U.S.C.
2014(d)) is amended by striking ``(b) The Secretary'' and
inserting the following:
``(b) Eligibility Standards.--Except as otherwise provided
in this Act, the Secretary''.
SEC. 1023. DOUBLE PENALTIES FOR VIOLATING FOOD STAMP PROGRAM
REQUIREMENTS.
Section 6(b)(1) of the Food Stamp Act of 1977 (7 U.S.C.
2015(b)(1)) is amended--
(1) in clause (i), by striking ``six months'' and
inserting ``1 year''; and
(2) in clause (ii), by striking ``1 year'' and
inserting ``2 years''.
SEC. 1024. DISQUALIFICATION OF CONVICTED INDIVIDUALS.
Section 6(b)(1)(iii) of the Food Stamp Act of 1977 (7
U.S.C. 2015(b)(1)(iii) is amended--
(1) in subclause (II), by striking ``or'' at the end;
(2) in subclause (III), by striking the period at the
end and inserting ``; or''; and
(3) by inserting after subclause (III) the following:
``(IV) a conviction of an offense under
subsection (b) or (c) of section 15 involving
an item covered by subsection (b) or (c) of
section 15 having a value of $500 or more.''.
SEC. 1027. EMPLOYMENT AND TRAINING.
(a) In General.--Section 6(d)(4) of the Food Stamp Act of
1977 (7 U.S.C. 2015(d)(4)) is amended--
(1) in subparagraph (A)--
(A) by striking ``Not later than April 1,
1987, each'' and inserting ``Each'';
(B) by inserting ``work,'' after ``skills,
training,''; and
(C) by adding at the end the following:
``Each component of an employment and training
program carried out under this paragraph shall
be delivered through a statewide workforce
development system, unless the component is not
available locally through the statewide
workforce development system.'';
(2) in subparagraph (B)--
(A) in the matter preceding clause (i), by
striking the colon at the end and inserting the
following: ``, except that the State agency
shall retain the option to apply employment
requirements prescribed under this subparagraph
to a program applicant at the time of
application:'';
(B) in clause (i), by striking ``with terms
and conditions'' and all that follows through
``time of application''; and
(C) in clause (iv)--
(i) by striking subclauses (I) and
(II); and
(ii) by redesignating subclauses
(III) and (IV) as subclauses (I) and
(II), respectively;
(3) in subparagraph (D)--
(A) in clause (i), by striking ``to which the
application'' and all that follows through ``30
days or less'';
(B) in clause (ii), by striking ``but with
respect'' and all that follows through ``child
care''; and
(C) in clause (iii), by striking ``, on the
basis of'' and all that follows through
``clause (ii)'' and inserting ``the exemption
continues to be valid'';
(4) in subparagraph (E), by striking the third
sentence;
(5) in subparagraph (G)--
(A) by striking ``(G)(i) The State'' and
inserting ``(G) The State''; and
(B) by striking clause (ii);
(6) in subparagraph (H), by striking ``(H)(i) The
Secretary'' and all that follows through ``(ii) Federal
funds'' and inserting ``(H) Federal funds'';
(7) in subparagraph (I)(i)(II), by striking ``, or
was in operation,'' and all that follows through
``Social Security Act'' and inserting the following:
``), except that no such payment or reimbursement shall
exceed the applicable local market rate'';
(8)(A) by striking subparagraphs (K) and (L) and
inserting the following:
``(K) Limitation on funding.--Notwithstanding
any other provision of this paragraph, the
amount of funds a State agency uses to carry
out this paragraph (including under
subparagraph (I)) for participants who are
receiving benefits under a State program funded
under part A of title IV of the Social Security
Act (42 U.S.C. 601 et seq.) shall not exceed
the amount of funds the State agency used in
fiscal year 1995 to carry out this paragraph
for participants who were receiving benefits in
fiscal year 1995 under a State program funded
under part A of title IV of the Act (42 U.S.C.
601 et seq.).''; and
(B) by redesignating subparagraphs (M) and
(N) as subparagraphs (L) and (M), respectively;
and
(9) in subparagraph (L), as redesignated by paragraph
(8)(B)--
(A) by striking ``(L)(i) The Secretary'' and
inserting ``(L) The Secretary''; and
(B) by striking clause (ii).
(b) Funding.--Section 16(h) of the Act (7 U.S.C. 2025(h))
is amended by striking ``(h)(1)(A) The Secretary'' and all that
follows through the end of paragraph (1) and inserting the
following:
``(h) Funding of Employment and Training Programs.--
``(1) In general.--
``(A) Amounts.--To carry out employment and
training programs, the Secretary shall reserve
for allocation to State agencies from funds
made available for each fiscal year under
section 18(a)(1) the amount of--
``(i) for fiscal year 1996,
$77,000,000;
``(ii) for fiscal year 1997,
$79,000,000;
``(iii) for fiscal year 1998,
$81,000,000;
``(iv) for fiscal year 1999,
$84,000,000;
``(v) for fiscal year 2000,
$86,000,000;
``(vi) for fiscal year 2001,
$88,000,000; and
``(vii) for fiscal year 2002,
$90,000,000.
``(B) Allocation.--The Secretary shall
allocate the amounts reserved under
subparagraph (A) among the State agencies using
a reasonable formula (as determined by the
Secretary) that gives consideration to the
population in each State affected by section
6(o).
``(C) Reallocation.--
``(i) Notification.--A State agency
shall promptly notify the Secretary if
the State agency determines that the
State agency will not expend all of the
funds allocated to the State agency
under subparagraph (B).
``(ii) Reallocation.--On notification
under clause (i), the Secretary shall
reallocate the funds that the State
agency will not expend as the Secretary
considers appropriate and equitable.
``(D) Minimum allocation.--Notwithstanding
subparagraphs (A) through (C), the Secretary
shall ensure that each State agency operating
an employment and training program shall
receive not less than $50,000 in each fiscal
year.''.
(c) Additional Matching Funds.--Section 16(h)(2) of the Act
(7 U.S.C. 2025(h)(2)) is amended by inserting before the period
at the end the following: ``, including the costs for case
management and casework to facilitate the transition from
economic dependency to self-sufficiency through work''.
(d) Reports.--Section 16(h) of the Act (7 U.S.C. 2025(h))
is amended--
(1) in paragraph (5)--
(A) by striking ``(5)(A) The Secretary'' and
inserting ``(5) The Secretary''; and
(B) by striking subparagraph (B); and
(2) by striking paragraph (6).
SEC. 1030. DISQUALIFICATION OF FLEEING FELONS.
Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as
amended by section 1029, is further amended by inserting after
subsection (j) the following:
``(k) Disqualification of Fleeing Felons.--No member of a
household who is otherwise eligible to participate in the food
stamp program shall be eligible to participate in the program
as a member of that or any other household during any period
during which the individual is--
(1) fleeing to avoid prosecution, or custody or
confinement after conviction, under the law of the
place from which the individual is fleeing, for a
crime, or attempt to commit a crime, that is a felony
under the law of the place from which the individual is
fleeing or that, in the case of New Jersey, is a high
misdemeanor under the law of New Jersey; or
``(2) violating a condition of probation or parole
imposed under a Federal or State law.''.
SEC. 1034. ENCOURAGE ELECTRONIC BENEFIT TRANSFER SYSTEMS.
(a) In General.--Section 7(i) of the Food Stamp Act of 1977
(7 U.S.C. 2016(i)) is amended--
(1) by striking paragraph (1) and inserting the
following:
``(1) Electronic benefit transfers.--
``(A) Implementation.--Each State agency
shall implement an electronic benefit transfer
system in which household benefits determined
under section 8(a) or 24 are issued from and
stored in a central databank before October 1,
2002, unless the Secretary provides a waiver
for a State agency that faces unusual barriers
to implementing an electronic benefit transfer
system.
``(C) State flexibility.--Subject to
paragraph (2), a State agency may procure and
implement an electronic benefit transfer system
under the terms, conditions, and design that
the State agency considers appropriate.
``(D) Operation.--An electronic benefit
transfer system should take into account
generally accepted standard operating rules
based on--
``(i) commercial electronic funds
transfer technology;
``(ii) the need to permit interstate
operation and law enforcement
monitoring; and
``(iii) the need to permit monitoring
and investigations by authorized law
enforcement agencies.'';
``(8) Replacement card fee.--A State agency may
collect a charge for replacement of an electronic
benefit transfer card by reducing the monthly allotment
of the household receiving the replacement card.
``(9) Optional photographic identification.--
``(A) In general.--A State agency may require
that an electronic benefit card contain a
photograph of 1 or more members of a household.
``(B) Other authorized users.--If a State
agency requires a photograph on an electronic
benefit card under subparagraph (A), the State
agency shall establish procedures to ensure
that any other appropriate member of the
household or any authorized representative of
the household may utilize the card.''.
SEC. 1035. VALUE OF MINIMUM ALLOTMENT.
The proviso in section 8(a) of the Food Stamp Act of 1977
(7 U.S.C. 2017(a)) is amended by striking ``, and shall be
adjusted'' and all that follows through ``$5.''.
SEC. 1036. BENEFITS ON RECERTIFICATION.
Section 8(c)(2)(B) of the Food Stamp Act of 1977 (7 U.S.C.
2017(c)(2)(B)) is amended by striking ``of more than one
month''.
SEC. 1037. OPTIONAL COMBINED ALLOTMENT AND EXPEDITED HOUSEHOLDS.
Section 8(c) of the Food Stamp Act of 1977 (7 U.S.C.
2017(c)) is amended by striking paragraph (3) and inserting the
following:
``(3) Optional combined allotment for expedited
households.--A State agency may provide to an eligible
household applying after the 15th day of a month, in
lieu of the initial allotment of the household and the
regular allotment of the household for the following
month, an allotment that is equal to the total amount
of the initial allotment and the first regular
allotment. The allotment shall be provided in
accordance with section 11(e)(3) in the case of a
household that is not entitled to expedited service and
in accordance with paragraphs (3) and (9) of section
11(e) in the case of a household that is entitled to
expedited service.''.
SEC. 1038. FAILURE TO COMPLY WITH OTHER MEANS-TESTED PUBLIC ASSISTANCE
PROGRAMS.
Section 8 of the Food Stamp Act of 1977 (7 U.S.C. 2017) is
amended by striking subsection (d) and inserting the following:
``(d) Reduction of public assistance benefits.--
``(1) In general.--If the benefits of a household are
reduced under a Federal, State, or local law relating
to a means-tested public assistance program for the
failure of a member of the household to perform an
action required under the law or program, for the
duration of the reduction--
``(A) the household may not receive an
increased allotment as the result of a decrease
in the income of the household to the extent
that the decrease is the result of the
reduction; and
``(B) the State agency may reduce the
allotment of the household by not more than 25
percent.
SEC. 1037. OPTIONAL COMBINED ALLOTMENT FOR EXPEDITED HOUSEHOLDS.
Section 8(c) of the Food Stamp Act of 1977 (7 U.S.C.
2017(c)) is amended by striking paragraph (3) and inserting the
following:
``(3) Optional combined allotment for expedited
households.--A State agency may provide to an eligible
household applying after the 15th day of a month, in
lieu of the initial allotment of the household and the
regular allotment of the household for the following
month, an allotment that is equal to the total amount
of the initial allotment and the first regular
allotment. The allotment shall be provided in
accordance with section 11(e)(3) in the case of a
household that is not entitled to expedited service and
in accordance with paragraphs (3) and (9) of section
11(e) in the case of a household that is entitled to
expedited service.''.
SEC. 1039. ALLOTMENTS FOR HOUSEHOLDS RESIDING IN CENTERS.
Section 8 of the Food Stamp Act of 1977 (7 U.S.C. 2017) is
amended by adding at the end the following:
``(f) Allotments for Households Residing in Centers.--
``(1) In general.--In the case of an individual who
resides in a center for the purpose of a drug or
alcoholic treatment program described in the last
sentence of section 3(i), a State agency may provide an
allotment for the individual to--
``(A) the center as an authorized
representative of the individual for a period
that is less than 1 month; and
``(B) the individual, if the individual
leaves the center.
``(2) Direct payment.--A State agency may require an
individual referred to in paragraph (1) to designate
the center in which the individual resides as the
authorized representative of the individual for the
purpose of receiving an allotment.''.
SEC. 1046. EXCHANGE OF LAW ENFORCEMENT INFORMATION.
Section 11(e)(8) of the Food Stamp Act of 1977 (7 U.S.C.
2020(e)(8)) is amended--
(1) by striking ``that (A) such'' and inserting the
following: ``that--
``(A) the'';
(2) by striking ``law, (B) notwithstanding'' and
inserting the following: ``law;
``(B) notwithstanding'';
(3) by striking ``Act, and (C) such'' and inserting
the following: ``Act;
``(C) the''; and
(4) by adding at the end the following:
``(D) notwithstanding any other provision of
law, the address, social security number, and,
if available, photograph of any member of a
household shall be made available, on request,
to any Federal, State, or local law enforcement
officer if the officer furnishes the State
agency with the name of the member and notifies
the agency that--
``(i) the member--
``(I) is fleeing to avoid
prosecution, or custody or
confinement after conviction,
for a crime (or attempt to
commit a crime) that, under the
law of the place the member is
fleeing, is a felony (or, in
the case of New Jersey, a high
misdemeanor), or is violating a
condition of probation or
parole imposed under Federal or
State law; or
``(II) has information that
is necessary for the officer to
conduct an official duty
related to subclause (I);
``(ii) locating or apprehending the
member is an official duty; and
``(iii) the request is being made in
the proper exercise of an official
duty; and
``(E) the safeguards shall not prevent
compliance with paragraph (16);''.
SEC. 1047. EXPEDITED COUPON SERVICE.
Section 11(e)(9) of the Food Stamp Act of 1977 (7 U.S.C.
2020(e)(9)) is amended--
(1) in subparagraph (A)--
(A) by striking ``five days'' and inserting
``7 days''; and
(B) by inserting ``and'' at the end;
(2) by striking subparagraphs (B) and (C);
(3) by redesignating subparagraph (D) as subparagraph
(B); and
(4) in subparagraph (B), as redesignated by paragraph
(3), by striking ``, (B), or (C)''.
SEC. 1048. WITHDRAWING FAIR HEARING REQUESTS.
Section 11(e)(10) of the Food Stamp Act of 1977 (7 U.S.C.
2020(e)(10)) is amended by inserting before the semicolon at
the end a period and the following: ``At the option of a State,
at any time prior to a fair hearing determination under this
paragraph, a household may withdraw, orally or in writing, a
request by the household for the fair hearing. If the
withdrawal request is an oral request, the State agency shall
provide a written notice to the household confirming the
withdrawal request and providing the household with an
opportunity to request a hearing''.
SEC. 1049. INCOME, ELIGIBILITY, AND IMMIGRATION STATUS VERIFICATION
SYSTEMS.
Section 11 of the Food Stamp Act of 1977 (7 U.S.C. 2020) is
amended--
(1) in subsection (e)(18), as redesignated by section
1044(1)(D)--
(A) by striking ``that information is'' and
inserting ``at the option of the State agency,
that information may be''; and
(B) by striking ``shall be requested'' and
inserting ``may be requested''; and
(2) by adding at the end the following:
``(p) State Verification Option--Notwithstanding any other
provision of law, in carrying out the food stamp program, a
State agency shall not be required to use an income and
eligibility or an immigration status verification system
established under section 1137 of the Social Security Act (42
U.S.C. 1320b-7).''.
SEC. 1059. AUTHORIZATION OF PILOT PROJECTS.
Section 17(b)(1)(B) of the Food Stamp Act of 1977 (7 U.S.C.
2026(b)(1)(B)), as amended by section 1058, is further
amended--
(1) in clause (iv), by striking ``coupons. Any
pilot'' and inserting the following: ``coupons.
``(v) Cash payment pilot projects.--
Any pilot''; and
(2) in clause (v), as so amended, by striking
``1995'' and inserting ``2002''.
SEC. 1060. RESPONSE TO WAIVERS.
Section 17(b)(1) of the Food Stamp Act of 1977 (7 U.S.C.
2026(b)(1)), as amended by section 1058, is further amended by
adding at the end the following:
``(D) Response to waivers.--
``(i) Response.--Not later than 60
days after the date of receiving a
request for a waiver under subparagraph
(A), the Secretary shall provide a
response that--
``(I) approves the waiver
request;
``(II) denies the waiver
request and explains any
modification needed for
approval of the waiver request;
``(III) denies the waiver
request and explains the
grounds for the denial; or
``(IV) requests clarification
of the waiver request.
``(ii) Failure to respond.--If the
Secretary does not provide a response
in accordance with clause (i), the
waiver shall be considered approved,
unless the approval is specifically
prohibited by this Act.
``(iii) Notice of denial.--On denial
of a waiver request under clause
(i)(III), the Secretary shall provide a
copy of the waiver request and a
description of the reasons for the
denial to the Committee on Agriculture
of the House of Representatives and the
Committee on Agriculture, Nutrition,
and Forestry of the Senate.''.
Subtitle B--Commodity Distribution Programs
SEC. 1071. COMMODITY DISTRIBUTION PROGRAM; COMMODITY SUPPLEMENTAL FOOD
PROGRAM.
(a) Reauthorization.--The first sentence of section 4(a) of
the Agriculture and Consumer Protection Act of 1973 (Public Law
93-86; 7 U.S.C. 612c note) is amended by striking ``1995'' and
inserting ``2002''.
(b) Funding.--Section 5 of the Act (Public Law 93-86; 7
U.S.C. 612c note) is amended--
(1) in subsection (a)(2), by striking ``1995'' and
inserting ``2002''; and
(2) in subsection (d)(2), by striking ``1995'' and
inserting ``2002''.
SEC. 1073. FOOD BANK DEMONSTRATION PROJECT.
Section 3 of the Charitable Assistance and Food Bank Act of
1987 (Public Law 100-232; 7 U.S.C. 612c note) is repealed.
SEC. 1074. HUNGER PREVENTION PROGRAMS.
The Hunger Prevention Act of 1988 (Public Law 100-435; 7
U.S.C 612c note) is amended--
(1) by striking section 110;
(2) by striking subtitle C of title II; and
(3) by striking section 502.
SEC. 1075. REPORT ON ENTITLEMENT COMMODITY PROCESSING.
Section 1773 of the Food, Agriculture, Conservation, and
Trade Act of 1990 (Public Law 101-624; 7 U.S.C. 612c note) is
amended by striking subsection (f).
TITLE XI--MISCELLANEOUS
SEC. 1101. EXPENDITURE OF FEDERAL FUNDS IN ACCORDANCE WITH LAWS AND
PROCEDURES APPLICABLE TO EXPENDITURE OF STATE
FUNDS.
(a) In General.--Notwithstanding any other provision of
law, any funds received by a State under the provisions of law
specified in subsection (b) shall be expended only in
accordance with the laws and procedures applicable to
expenditures of the State's own revenues, including
appropriation by the State legislature, consistent with the
terms and conditions required under such provisions of law.
TITLE VI--FEDERAL RETIREMENT AND RELATED PROVISIONS
Subtitle A--Civil Service and Postal Service Provisions
SEC. 6001. EXTENSION OF DELAY IN COST-OF-LIVING ADJUSTMENTS IN FEDERAL
EMPLOYEE RETIREMENT BENEFITS THROUGH FISCAL YEAR
2002.
Section 11001(a) of the Omnibus Budget Reconciliation Act
of 1993 (Public Law 103-66; 107 Stat. 408) is amended in the
matter preceding paragraph (1) by striking out ``or 1996,'' and
inserting in lieu thereof ``1996, 1997, 1998, 1999, 2000, 2001,
or 2002,''.
SEC. 6002. INCREASED CONTRIBUTIONS TO FEDERAL CIVILIAN RETIREMENT
SYSTEMS.
(a) Civil Service Retirement System.--
(1) Deductions.--The first sentence of section
8334(a)(1) of title 5, United States Code, is amended
to read as follows: ``The employing agency shall deduct
and withhold from the basic pay of an employee, Member,
Congressional employee, law enforcement officer,
firefighter, bankruptcy judge, judge of the United
States Court of Appeals for the Armed Forces, United
States magistrate, or Claims Court judge, as the case
may be, the percentage of basic pay applicable under
subsection (c).''.
(2) Agency contributions.--
(A) Increase in agency contribution during
calendar years 1996 through 2002.--Section
8334(a)(1) of title 5, United States Code (as
amended by this section) is further amended--
(i) by inserting ``(A)'' after
``(1)''; and
(ii) by adding at the end thereof the
following new subparagraph;
``(B)(i) Notwithstanding subparagraph (A),
the agency contribution under the second
sentence of such subparagraph, during the
period beginning on January 1, 1996, through
December 31, 2002--
``(I) for each employing agency
(other than the United States Postal
Service or the Washington Metropolitan
Airport Authority) shall be 8.51
percent of the basic pay of an
employee, Congressional employee, and a
Member of Congress, 9.01 percent of the
basic pay of a law enforcement officer,
a member of the Capitol Police, and a
firefighter, and 8.51 percent of the
basic pay of a Claims Court judge, a
United States magistrate, a judge of
the United States Court of Appeals for
the Armed Services, and a bankruptcy
judge, as the case may be; and
``(II) for the United States Postal
Service and the Washington Metropolitan
Airport Authority shall be 7 percent of
the basic pay of an employee and 7.5
percent of the basic pay of a law
enforcement officer or firefighter.''.
(B) No reduction in agency contributions by
the postal service.--Agency contributions by
the United States Postal Service under section
8348(h) of title 5, United States Code--
(i) shall not be reduced as a result
of the amendments made under paragraph
(3) of this subsection; and
(ii) shall be computed as through
such amendments had not been enacted.
(3) Individual deductions, withholdings, and
deposits.--The table under section 8334(c) of title 5,
United States Code, is amended--
(A) in the matter relating to an employee by
striking out
``7............. After December 31,
1969.''
and inserting in lieu thereof the following:
``7............. January 1, 1970, to
December 31, 1995.
7.25............ January 1, 1996, to
December 31, 1996.
7.4............. January 1, 1997, to
December 31, 1997.
7.5............. January 1, 1998, to
December 31, 2002.
7............... After December 31,
2002.'';
(B) in the matter relating to a Member or
employee for Congressional employee service by
striking out
``7\1/2\........ After December 31,
1969.''
and inserting in lieu thereof the following:
``7.5........... January 1, 1970, to
December 31, 1995.
7.25............ January 1, 1996, to
December 31, 1996.
7.4............. January 1, 1997, to
December 31, 1997.
7.5............. January 1, 1998, to
December 31, 2002.
7............... After December 31,
2002.'';
(C) in the matter relating to a Member for
Member service by striking out
``8............. After December 31,
1969.''
and inserting in lieu thereof the following:
``8............. January 1, 1970, to
December 31, 1995.
7.25............ January 1, 1996, to
December 31, 1996.
7.4............. January 1, 1997, to
December 31, 1997.
7.5............. January 1, 1998, to
December 31, 2002.
7............... After December 31,
2002.'';
(D) in the matter relating to a law
enforcement officer for law enforcement service
and firefighter for firefighter service by
striking out
``7\1/2\........ After December 31,
1974.''
and inserting in lieu thereof the following:
``7.5........... January 1, 1975, to
December 31, 1995.
7.75............ January 1, 1996, to
December 31, 1996.
7.9............. January 1, 1997, to
December 31, 1997.
8............... January 1, 1998, to
December 31, 2002.
7.5............. After December 31,
2002.'';
(E) in the matter relating to a bankruptcy
judge by striking out
``8............. After December 31,
1983.''
and inserting in lieu thereof the following:
``8............. January 1, 1984, to
December 31, 1995.
7.5............. January 1, 1996, to
December 31, 1996.
7.4............. January 1, 1997, to
December 31, 1997.
7.5............. January 1, 1998, to
December 31, 2002.
7............... After December 31,
2002.'';
(F) in the matter relating to a judge of the
United States Court of Appeals for the Armed
Forces for service as a judge of that court by
striking out
``8............. On and after the
date of the
enactment of the
Department of
Defense
Authorization Act,
1984.''
and inserting in lieu thereof the following:
``8............. The date of the
enactment of the
Department of
Defense
Authorization Act,
1984, to December
31, 1995.
7.25............ January 1, 1996, to
December 31, 1996.
7.4............. January 1, 1997, to
December 31, 1997.
7.5............. January 1, 1998, to
December 31, 2002.
7............... After December 31,
2002.'';
(G) in the matter relating to a United States
magistrate by striking out
``8............. After September 30,
1987.''
and inserting in lieu thereof the following:
``8............. October 1, 1987, to
December 31, 1995.
7.25............ January 1, 1996, to
December 31, 1996.
7.4............. January 1, 1997, to
December 31, 1997.
7.5............. January 1, 1998, to
December 31, 2002.
7............... After December 31,
2002.'';
(H) in the matter relating to a Claims Court
judge by striking out
``8............. After September 30,
1988.''
and inserting in lieu thereof the following:
``8............. October 1, 1988, to
December 31, 1995.
7.25............ January 1, 1996, to
December 31, 1996.
7.4............. January 1, 1997, to
December 31, 1997.
7.5............. January 1, 1998, to
December 31, 2002.
7............... After December 31,
2002.'';
and
(I) by inserting after the matter relating to
a Claims Court judge the following:
``Member of the Capitol Police... 2.5............. August 1, 1920, to
June 30, 1926.
3.5............. July 1, 1926, to
June 30, 1942.
5............... July 1, 1942, to
June 30, 1948.
6............... July 1, 1948, to
October 31, 1956.
6.5............. November 1, 1956,
to December 31,
1969.
7.5............. January 1, 1970, to
December 31, 1995.
7.75............ January 1, 1996, to
December 31, 1996.
7.9............. January 1, 1997, to
December 31, 1997.
8............... January 1, 1998, to
December 31, 2002.
7.5............. After December 31,
2002.''.
(4) Other service.--
(A) Military service.--Section 8334(j) of
title 5, United States Code, is amended--
(i) in paragraph (1)(A) by inserting
``and subject to paragraph (5),'' after
``Except as provided in subparagraph
(B),''; and
(ii) by adding at the end thereof the
following new paragraph:
``(5) Effective with respect to any period of
military service after December 31, 1995, the
percentage of basic pay under section 204 of title 37
payable under paragraph (1) shall be equal to the same
percentage as would be applicable under section 8334(c)
for that same period for service as an employee,
subject to paragraph (1)(B).''.
(B) Volunteer service.--Section 8334(l) of
title 5, United States Code, is amended--
(i) in paragraph (1) by adding at the
end thereof the following: ``This
paragraph shall be subject to paragraph
(4).''; and
(ii) by adding at the end thereof the
following new paragraph:
``(4) Effective with respect to any period of service
after December 31, 1995, the percentage of the
readjustment allowance or stipend (as the case may be)
payable under paragraph (1) shall be equal to the same
percentage as would be applicable under section 8334(c)
for that same period for service as an employee.''.
(b) Federal Employees Retirement System.--
(1) Individual deductions and withholdings.--
(A) In general.--Section 8422(a) of title 5,
United States Code, is amended by striking out
paragraph (2) and inserting in lieu thereof the
following:
``(2) The percentage to be deducted and withheld from
basic pay for any pay period shall be equal to--
``(A) the applicable percentage under
paragraph (3), minus
``(B) the percentage then in effect under
section 3101(a) of the Internal Revenue Code of
1986 (relating to rate of tax for old-age,
survivors, and disability insurance).
``(3) The applicable percentage under this paragraph,
for civilian service shall be as follows:
Employee......................... 7............... Before January 1,
1996.
7.25............ January 1, 1996, to
December 31, 1996.
7.4............. January 1, 1997, to
December 31, 1997.
7.5............. January 1, 1998, to
December 31, 2002.
7............... After December 31,
2002.
Congressional employee........... 7.5............. Before January 1,
1996.
7.25............ January 1, 1996, to
December 31, 1996.
7.4............. January 1, 1997, to
December 31, 1997.
7.5............. January 1, 1998, to
December 31, 2002.
7............... After December 31,
2002.
Member........................... 7.5............. Before January 1,
1996.
7.25............ January 1, 1996, to
December 31, 1996.
7.4............. January 1, 1997, to
December 31, 1997.
7.5............. January 1, 1998, to
December 31, 2002.
7............... After December 31,
2002.
Law enforcement officer, 7.5............. Before January 1,
firefighter, member of the 1996.
Capitol Police, or air traffic
controller.
7.75............ January 1, 1996, to
December 31, 1996.
7.9............. January 1, 1997, to
December 31, 1997.
8............... January 1, 1998, to
December 31, 2002.
7.5............. After December 31,
2002.
(B) Military service.--Section 8422(e) of
title 5, United States Code, is amended--
(i) in paragraph (1)(A) by inserting
``and subject to paragraph (6),'' after
``Except as provided in subparagraph
(B),''; and
(ii) by adding at the end thereof the
following:
``(6) The percentage of basic pay under section 204
of title 37 payable under paragraph (1), with respect
to any period of military service performed during--
``(A) January 1, 1996, through December 31,
1996, shall be 3.25 percent;
``(B) January 1, 1997, through December 31,
1997, shall be 3.4 percent; and
``(C) January 1, 1998, through December 31,
2002, shall be 3.5 percent.''.
(C) Volunteer service.--Section 8422(f) of
title 5, United States Code, is amended--
(i) in paragraph (1) by adding at the
end thereof the following: ``This
paragraph shall be subject to paragraph
(4).''; and
(ii) by adding at the end the
following:
``(4) The percentage of the readjustment allowance or
stipend (as the case may be) payable under paragraph
(1), with respect to any period of volunteer service
performed during--
``(A) January 1, 1996, through December 31,
1996, shall be 3.25 percent;
``(B) January 1, 1997, through December 31,
1997, shall 3.4 percent; and
``(C) January 1, 1998, through December 31,
2002, shall be 3.5 percent.''.
(2) No reduction in agency contributions.--Agency
contributions under section 8423 (a) and (b) of title
5, United States Code, shall not be reduced as a result
of the amendments made under paragraph (1) of this
subsection.
(c) Effective Date.--The amendments made by this section
shall take effect on the first day of the first applicable pay
period beginning on or after January 1, 1996.
SEC. 6003. FEDERAL RETIREMENT PROVISIONS RELATING TO MEMBERS OF
CONGRESS AND CONGRESSIONAL EMPLOYEES.
(a) Relating to the Years of Service as a Member of
Congress and Congressional Employees for Purposes of Computing
an Annuity.--
(1) CSRS.--Section 8339 of title 5, United States
Code, is amended--
(A) in subsection (a) inserting ``or Member''
after ``employee''; and
(B) by striking out subsections (b) and (c).
(2) FERS.--Section 8415 of title 5, United States
Code, is amended--
(A) by striking out subsections (b) and (c);
(B) in subsections (a) and (g) by inserting
``or Member'' after ``employee'' each place it
appears; and
(C) in subsection (g)(2) by striking out
``Congressional employee''.
(b) Accrual Rate for Member and Congressional Employee
Service Performed but Not Vested Before Effective Date.--
(1) Application.--This subsection shall apply to an
individual who--
(A) is a Member of Congress or Congressional
employee on December 31, 1995;
(B) has performed less than 5 years of
service as a Member of Congress or
Congressional employee on December 31, 1995;
and
(C) after December 31, 1995, completes 5
years of service as a Member of Congress or
Congressional employee, that includes a period
of service performed as a Member of Congress or
Congressional employee before January 1, 1996.
(2) Computation of annuity.--In computing the annuity
of an individual described under paragraph (1)--
(A) any period of service as a Member of
Congress or Congressional employee performed
before January 1, 1996, shall be computed under
section 8339 or 8415 of title 5, United States
Code (as though the amendments under subsection
(a) of this section were not enacted); and
(B) the 5 year service requirement under
subsections (b) and (c) of section 8339 or 8415
of such title (as in effect before the date of
enactment of this Act) shall be deemed
fulfilled.
(c) Capitol Police.--Section 8339(q) of title 5, United
States Code, is amended by striking out ``with subsection (b),
except that, in the case of a member who retires under section
8335(d) or 8336(m), and who meets the requirements of
subsection (b)(2),'' and inserting in lieu thereof ``with
subsection (a), except that in the case of a member who retires
under section 8335(d) or 8336(m), and who has deductions
withheld from his pay or has made deposit covering his last 5
years of civilian service,''.
(d) Administrative Regulations.--The Office of Personnel
Management, in consultation with the Secretary of the Senate
and the Clerk of the House of Representatives, may prescribe
regulations to carry out the provisions of this section and the
amendments made by this section for applicable employees and
Members of Congress.
(e) Effective Dates.--
(1) Years of service; annuity computation.--
(A) Service after effective date.--The
amendments made by subsection (a) shall take
effect on January 1, 1996, and shall apply only
with respect to the computation of an annuity
relating to--
(i) the service of a Member of
Congress as a Member or as a
Congressional employee performed on or
after January 1, 1996; and
(ii) the service of a Congressional
employee as a Congressional employee
performed on or after January 1, 1996.
(B) Service before effective date.--An
annuity shall be computed as though the
amendments made under subsection (a) had not
been enacted with respect to--
(i) the service of a Member of
Congress as a Member or a Congressional
employee or military service performed
before January 1, 1996; and
(ii) the service of a Congressional
employee as a Congressional employee or
military service performed before
January 1, 1996.
(C) Alternative effective date relating to
members of congress.--If a court of competent
jurisdiction makes a final determination that a
provision of this paragraph violates the 27th
amendment of the United States Constitution,
the effective date and application dates
relating to Members of Congress shall be
January 1, 1997.
(2) Administrative provisions.--The provisions of
subsections (b), (c), and (d) shall take effect on the
date of the enactment of this Act.
SEC. 6004. ACCRUAL RATES RELATING TO CERTAIN JUDGES WITH SIMILAR
TREATMENT AS CONGRESSIONAL SERVICE.
(a) Judge of the United States Court of Military Appeals.--
Section 8339(d)(7) of title 5, United States Code, is amended
by striking out ``service.'' and inserting in lieu thereof
``service performed before January 1, 1996.''
(b) Claims Court Judge, Bankruptcy Judge, United States
Magistrate.--Section 8339(n) of title 5, United States Code, is
amended by striking out ``service.'' and inserting in lieu
thereof ``service performed before January 1, 1996. The annuity
of any such employee is, and with respect to any service
referred to in the preceding sentence that is performed on or
after January 1, 1996, computed under subsection (a).''.
SEC. 6005. REPEAL OF AUTHORIZATION OF TRANSITIONAL APPROPRIATIONS FOR
THE UNITED STATES POSTAL SERVICE.
(a) Repeal.--
(1) In general.--Section 2004 of title 39, United
States Code, is repealed.
(2) Technical and conforming amendment.--
(A) The table of sections for chapter 20 of
such title is amended by repealing the item
relating to section 2004.
(B) Section 2003(e)(2) of such title is
amended by striking ``sections 2401 and 2004''
each place it appears and inserting ``section
2401''.
(b) Clarification That Liabilities Formerly Paid Pursuant
to Section 2004 Remain Liabilities Payable by the Postal
Service.--Section 2003 of title 39, United States Code, is
amended by adding at the end the following:
``(h) Liabilities of the former Post Office Department to
the Employees' Compensation Fund (appropriations for which were
authorized by former section 2004, as in effect before the
effective date of this subsection) shall be liabilities of the
Postal Service payable out of the Fund.''.
(c) Effective Date.--
(1) In general.--This section and the amendments made
by this section shall be effective as of October 1,
1995.
(2) Provisions relating to payments for fiscal year
1996.--
(A) Amounts not yet paid.--No payment may be
made to the Postal Service Fund, on or after
the date of the enactment of this Act, pursuant
to any appropriation for fiscal year 1996
authorized by section 2004 of title 39, United
States Code (as in effect before the effective
date of this section).
(B) Amounts paid.--If any payment to the
Postal Service Fund is or has been made
pursuant to an appropriation for fiscal year
1996 authorized by such section 2004, then an
amount equal to the amount of such payment
shall be paid from such Fund into the Treasury
as miscellaneous receipts.
SEC. 13103. REQUIREMENT THAT CERTAIN AGENCIES PREFUND GOVERNMENT HEALTH
BENEFITS CONTRIBUTIONS FOR THEIR ANNUITANTS.
(a) Definitions.--For the purpose of this section--
(1) the term ``agency'' means any agency or other
instrumentality within the executive branch of the
Government, the receipts and disbursements of which are
not generally included in the totals of the budget of
the United States Government submitted by the
President;
(2) the term ``health benefits plan'' means, with
respect to an agency, a health benefits plan,
established by or under Federal law, in which employees
or annuitants of such agency may participate;
(3) the term ``health-benefits coverage'' means
coverage under a health benefits plan;
(4) an individual shall be considered to be an
``annuitant of an agency'' if such individual is
entitled to an annuity, under a retirement system
established by or under Federal law, by virtue of--
(A) such individual's service with, and
separation from, such agency; or
(B) being the survivor of an annuitant under
subparagraph (A) or of an individual who died
while employed by such agency; and
(5) the term ``Office'' means the Office of Personnel
Management.
(b) Prefunding Requirement.--
(1) In general.--Effective as of October 1, 1996,
each agency shall be required to prepay the Government
contributions which are or will be required in
connection with providing health-benefits coverage for
annuitants of such agency.
(2) Regulations.--The Office shall prescribe such
regulations as may be necessary to carry out this
section. The regulations shall be designed to ensure at
least the following:
(A) Amounts paid by each agency shall be
sufficient to cover the amounts which would
otherwise be payable by such agency (on a
``pay-as-you-go'' basis), on or after the
applicable effective date under paragraph (1),
on behalf of--
(i) individuals who are annuitants of
the agency as of such effective date;
and
(ii) individuals who are employed by
the agency as of such effective date,
or who become employed by the agency
after such effective date, after such
individuals have become annuitants of
the agency (including their survivors).
(B)(i) For purposes of determining any
amounts payable by an agency--
(I) this section shall be treated as
if it had taken effect at the beginning
of the 20-year period which ends on the
effective date applicable under
paragraph (1) with respect to such
agency; and
(II) in addition to any amounts
payable under subparagraph (A), each
agency shall also be responsible for
paying any amounts for which it would
have been responsible, with respect to
the 20-year period described in
subclause (I), in connection with any
individuals who are annuitants or
employees of the agency as of the
applicable effective date under
paragraph (1).
(ii) Any amounts payable under this
subparagraph for periods preceding the
applicable effective date under paragraph (1)
shall be payable in equal installments over the
20-year period beginning on such effective
date.
(c) FASB Standards.--Regulations under subsection (b) shall
be in conformance with the provisions of standard 106 of the
Financial Accounting Standards Board, issued in December 1990.
(d) Clarification.--Nothing in this section shall be
considered to permit or require duplicative payments on behalf
of any individuals.
(e) Draft Legislation.--The Office shall prepare and submit
to Congress any draft legislation which may be necessary in
order to carry out this section.
TITLE VII--VETERANS AND RELATED PROVISIONS
SEC. 10001. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This title may be cited as the ``Veterans
Reconciliation Act of 1995''.
(b) Table of Contents.--The table of contents for this
title is as follows:
Sec. 10001. Short title; table of contents.
Subtitle A--Extension of Temporary Authorities
Sec. 10011. Authority to require that certain veterans make copayments
in exchange for receiving health-care benefits.
Sec. 10012. Medical care cost recovery authority.
Sec. 10013. Income verification authority.
Sec. 10014. Limitation on pension for certain recipients of medicaid-
covered nursing home care.
Sec. 10015. Home loan fees.
Sec. 10016. Procedures applicable to liquidation sales on defaulted home
loans guaranteed by the Department of Veterans Affairs.
Sec. 10017. Enhanced loan asset sale authority.
Subtitle B--Other Matters
Sec. 10021. Revision to prescription drug copayment.
Sec. 10022. Rounding down of cost-of-living adjustments in compensation
and DIC rates.
Sec. 10023. Revised standard for liability for injuries resulting from
Department of Veterans Affairs treatment.
Sec. 10024. Withholding of payments and benefits.
Subtitle A--Extension of Temporary Authorities
SEC. 10011. AUTHORITY TO REQUIRE THAT CERTAIN VETERANS MAKE COPAYMENTS
IN EXCHANGE FOR RECEIVING HEALTH-CARE BENEFITS.
(a) Hospital and Medical Care.--Section 8013(e) of the
Omnibus Budget Reconciliation Act of 1990 (38 U.S.C. 1710 note)
is amended by striking out ``September 30, 1998'' and inserting
in lieu thereof ``September 30, 2002''.
(b) Outpatient Medications.--Section 1722A(c) of title 38,
United States Code, is amended by striking out ``September 30,
1998'' and inserting in lieu thereof ``September 30, 2002''.
SEC. 10012. MEDICAL CARE COST RECOVERY AUTHORITY.
Section 1729(a)(2)(E) of title 38, United States Code, is
amended by striking out ``before October 1, 1998,'' and
inserting ``before October 1, 2002,''.
SEC. 10013. INCOME VERIFICATION AUTHORITY.
Section 5317(g) of title 38, United States Code, is amended
by striking out ``September 30, 1998'' and inserting in lieu
thereof ``September 30, 2002''.
SEC. 10014. LIMITATION ON PENSION FOR CERTAIN RECIPIENTS OF MEDICAID-
COVERED NURSING HOME CARE.
Section 5503(f)(7) of title 38, United States Code, is
amended by striking out ``September 30, 1998'' and inserting in
lieu thereof ``September 30, 2002''.
SEC. 10015. HOME LOAN FEES.
Section 3729(a) of title 38, United States Code, is
amended--
(1) in paragraph (4), by striking out ``October 1,
1998'' and inserting in lieu thereof ``October 1,
2002''; and
(2) in paragraph (5)(C), by striking out ``October 1,
1998'' and inserting in lieu thereof ``October 1,
2002''.
SEC. 10016. PROCEDURES APPLICABLE TO LIQUIDATION SALES ON DEFAULTED
HOME LOANS GUARANTEED BY THE DEPARTMENT OF VETERANS
AFFAIRS.
Section 3732(c)(11) of title 38, United States Code, is
amended by striking out ``October 1, 1998'' and inserting
``October 1, 2002''.
SEC. 10017. ENHANCED LOAN ASSET SALE AUTHORITY.
Section 3720(h)(2) of title 38, United States Code, is
amended by striking out ``December 31, 1995'' and inserting in
lieu thereof ``September 30, 2002''.
Subtitle B--Other Matters
SEC. 1002. ROUNDING DOWN OF COST-OF-LIVING ADJUSTMENTS IN COMPENSATION
AND DIC RATES.
(a) Fiscal Year 1996 COLA.--Effective as of December 1,
1995, the Secretary of Veterans Affairs shall recompute any
increase in an adjustment that is otherwise provided by law to
be effective during fiscal year 1996 in the rates of disability
compensation and dependency and indemnity compensation paid by
the Secretary as such rates were in effect on November 30,
1995. The recomputation shall provide for the same percentage
increase as provided under such law, but with amounts so
recomputed (if not a whole dollar amount).
``Sec. 1103. Cost-of-living adjustments
``(a) In the computation of cost-of-living adjustments for
fiscal years 1997 through 2002 in the rates of, and dollar
limitations applicable to, compensation payable under this
chapter, such adjustments shall be made by a uniform percentage
that is no more than the percentage equal to the social
security increase for that fiscal year, with all increased
monthly rates and limitations (other than increased rates or
limitations equal to a whole dollar amount) rounded down to the
next lower whole dollar amount.
``(b) For purposes of this section, the term `social
security increase' means the percentage by which benefit
amounts payable under title II of the Social Security Act (42
U.S.C. 401 et seq.) are increased for any fiscal year as a
result of a determination under section 215(i) of such Act (42
U.S.C. 415(i)).''.
(b) The table of sections at the beginning of such chapter
is amended by inserting after the item relating to section 1102
the following new item:
``1103. Cost-of-living adjustments.''.
(c) Out-Year DIC COLAs.--(1) Chapter 13 of title 38, United
States Code, is amended by inserting after section 1302 the
following new section:
``Sec. 1303. Cost-of-living adjustments
``(a) In the computation of cost-of-living adjustments for
fiscal years 1997 through 2002 in the rates of dependency and
indemnity compensation payable under this chapter, such
adjustments shall be made by a uniform percentage that is no
more than the percentage equal to the social security increase
for that fiscal year, with all increased monthly rates (other
than increased rates equal to a whole dollar amount) rounded
down to the next lower whole dollar amount.
``(b) For purposes of this section, the term `social
security increase' means the percentage by which benefit
amounts payable under title II of the Social Security Act (42
U.S.C. 401 et seq.) are increased for any fiscal year as a
result of a determination under section 215(i) of such Act (42
U.S.C. 415(i)).''.
(2) The table of sections at the beginning of such chapter
is amended by inserting after the item relating to section 1302
the following new item:
``1303. Cost-of-living adjustments.''.
SEC. 10023. REVISED STANDARD FOR LIABILITY FOR INJURIES RESULTING FROM
DEPARTMENT OF VETERANS AFFAIRS TREATMENT.
(a) Revised Standard.--Section 1151 of title 38, United
States Code, is amended--
(1) by designating the second sentence as subsection
(c);
(2) by striking out the first sentence and inserting
in lieu thereof the following:
``(a) Compensation under this chapter and dependency and
indemnity compensation under chapter 13 of this title shall be
awarded for a qualifying additional disability of a veteran or
the qualifying death of a veteran in the same manner as if such
disability or death were service-connected.
``(b)(1) For purposes of this section, a disability or
death is a qualifying additional disability or a qualifying
death only if the disability or death--
``(A) was caused by Department health care and was a
proximate result of--
``(i) negligence on the part of the
Department in furnishing the Department health
care; or
``(ii) an event not reasonably foreseeable;
or
``(B) was incurred as a proximate result of the
provision of training and rehabilitation services by
the Secretary (including by a service-provider used by
the Secretary for such purpose under section 3115 of
this title) as part of an approved rehabilitation
program under chapter 31 of this title.
``(2) For purposes of this section, the term `Department
health care' means hospital care, medical or surgical
treatment, or an examination that is furnished under any law
administered by the Secretary to a veteran by a Department
employee or in a facility over which the Secretary has direct
jurisdiction.
``(3) A disability or death of a veteran which is the
result of the veteran's willful misconduct is not a qualifying
disability or death for purposes of this section.''; and
(3) by adding at the end the following:
``(d) Effective with respect to injuries, aggravations of
injuries, and deaths occurring after September 30, 2002, a
disability or death is a qualifying additional disability or a
qualifying death for purposes of this section (notwithstanding
the provisions of subsection (b)(1)) if the disability or
death--
``(1) was the result of Department health care; or
``(2) was the result of the pursuit of a course of
vocational rehabilitation under chapter 31 of this
title.''.
(b) Conforming Amendments.--Subsection (c) of such section,
as designated by subsection (a)(1), is amended--
(1) by striking out ``, aggravation,'' both places it
appears; and
(2) by striking out ``sentence'' and inserting in
lieu thereof ``subsection''.
(c) Effective Date.--The amendments made by this section
shall apply to any administrative or judicial determination of
eligibility for benefits under section 1151 of title 38, United
States Code, based on a claim that is received by the Secretary
on or after October 1, 1995, including any such determination
based on an original application or an application seeking to
reopen, revise, reconsider, or otherwise readjudicate any claim
for benefits under section 1151 of that title or any
predecessor provision of law.
SEC. 10024. WITHHOLDING OF PAYMENTS AND BENEFITS.
(a) Notice Required in Lieu of Consent or Court Order.--
Section 3726 of title 38, United States Code, is amended by
striking out ``unless'' and all that follows and inserting in
lieu thereof the following: ``unless the Secretary provides
such veteran or surviving spouse with notice by certified mail
with return receipt requested of the authority of the Secretary
to waive the payment of indebtedness under section 5302(b) of
this title. If the Secretary does not waive the entire amount
of the liability, the Secretary shall then determine whether
the veteran or surviving spouse should be released from
liability under section 3713(b) of this title. If the Secretary
determines that the veteran or surviving spouse should not be
released from liability, the Secretary shall notify the veteran
or surviving spouse of that determination and provide a notice
of the procedure for appealing that determination, unless the
Secretary has previously made such determination and notified
the veteran or surviving spouse of the procedure for appealing
the determination.``.
(b) Conforming Amendment.--Section 5302(b) of such title is
amended by inserting ``with return receipt requested'' after
``certified mail''.
(c) Effective Date.--The amendments made by this section
shall apply with respect to any indebtedness to the United
States arising pursuant to chapter 37 of title 38, United
States Code, before, on, or after the date of the enactment of
this Act.
Subtitle C--Educational Benefits
SEC. 11031. LIMITATION REGARDING COST-OF-LIVING ADJUSTMENTS FOR
MONTGOMERY GI BILL BENEFITS.
With respect to each of fiscal years 1966 through 2002, the
cost-of-living adjustments in the rates of educational
assistance payable under chapter 30 of title 38, United States
Code, shall be the percentage equal to 50 percent of the
percentage by which such assistance would be increased under
section 3015(g) of such title with respect to such fiscal year
but for this section.
TITLE VIII--ASSET SALES; USER FEES AND OTHER MANDATORY PROGRAMS
Subtitle A--United States Enrichment Corporation
SEC. 3001. SHORT TITLE.
This subtitle may be cited as the ``USEC Privatization
Act''.
SEC. 3002. PURPOSE.
The purpose of this subtitle is to transfer the interest of
the United States in the United States Enrichment Corporation
to the private sector in a manner that provides for the long-
term viability of the Corporation, provides for the
continuation by the Corporation of the operation of the
Department of Energy's gaseous diffusion plants, provides for
the protection of the public interest in maintaining a reliable
and economical domestic source of uranium mining and enrichment
services, and, to the extent not inconsistent with such
purposes, secures the maximum proceeds to the United States.
SEC. 3003. DEFINITIONS.
For purposes of this subtitle:
(1) The term ``AVLIS'' means atomic vapor laser
isotope separation technology.
(2) The term ``Corporation'' means the United States
Enrichment Corporation and, unless the context
otherwise requires, includes the private corporation
and any successor thereto following privatization.
(3) The term ``gaseous diffusion plants'' means the
Paducah Gaseous Diffusion Plant at Paducah, Kentucky
and the Portsmouth Gaseous Diffusion Plant at Piketon,
Ohio.
(4) The term ``highly enriched uranium'' means
uranium enriched to 20 percent or more of the uranium-
235 isotope.
(5) The term ``low-enriched uranium'' means uranium
enriched to less than 20 percent of the uranium-235
isotope, including that which is derived from highly
enriched uranium.
(6) The term ``low-level radioactive waste'' has the
meaning given such term in section 2(9) of the Low-
Level Radioactive Waste Policy Act (42 U.S.C.
2021b(9)).
(7) The term ``private corporation'' means the
corporation established under section 3005.
(8) The term ``privatization'' means the transfer of
ownership of the Corporation to private investors.
(9) The term ``privatization date'' means the date on
which 100 percent of the ownership of the Corporation
has been transferred to private investors.
(10) The term ``public offering'' means an
underwritten offering to the public of the common stock
of the private corporation pursuant to section 3004.
(11) The ``Russian HEU Agreement'' means the
Agreement Between the Government of the United States
of America and the Government of the Russian Federation
Concerning the Disposition of Highly Enriched Uranium
Extracted from Nuclear Weapons, dated February 18,
1993.
(12) The term ``Secretary'' means the Secretary of
Energy.
(13) The ``Suspension Agreement'' means the Agreement
to Suspend the Antidumping Investigation on Uranium
from the Russian Federation, as amended.
(14) The term ``uranium enrichment'' means the
separation of uranium of a given isotopic content into
2 components, 1 having a higher percentage of a fissile
isotope and 1 having a lower percentage.
SEC. 3004. SALE OF THE CORPORATION.
(a) Authorization.--The Board of Directors of the
Corporation, with the approval of the Secretary of the
Treasury, shall transfer ownership of the assets and
obligations of the Corporation to the private corporation
established under section 3005 (which may be consummated
through a merger or consolidation effected in accordance with,
and having the effects provided under, the laws of the State of
incorporation of the private corporation, as if the Corporation
were incorporated thereunder.).
(b) Board Determination.--The Board, with the approval of
the Secretary of the Treasury, shall select the method of
transfer and establish terms and conditions for the transfer to
provide the maximum proceeds to the Treasury of the United
States and to provide for the long-term viability of the
private corporation, the continued operation of the gaseous
diffusion plants, and the public interest in maintaining
reliable and economical domestic uranium mining and enrichment
industries.
(c) Application of Securities Laws.--Any offering or sale
of securities by the private corporation shall be subject to
the Securities Act of 1993 (15 U.S.C. 77a et seq.), the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), and
the provisions of the Constitution and laws of any State,
territory, or possession of the United States relating to
transactions in securities.
(d) Proceeds.--Proceeds from the sale of the United States'
interest in the Corporation shall be--
(1) deposited in the general fund of the Treasury;
(2) included in the budget baseline required by the
Balanced Budget and Emergency Deficit Control Act of
1985; and
(3) counted as an offset to direct spending for
purposes of section 252 of such Act, notwithstanding
section 257(e) of such Act.
(e) Expenses.--Expenses of privatization shall be paid from
Corporation revenue accounts in the United States Treasury.
SEC. 3005 ESTABLISHMENT OF PRIVATE CORPORATION.
(a) Incorporation.--(1) The directors of the Corporation
shall establish a private for-profit corporation under the laws
of a State for the purpose of receiving the assets and
obligations of the Corporation at privatization and continuing
the business operations of the Corporation following
privatization.
(2) The directors of the Corporation may serve as
incorporators of the private corporation and shall take all
steps necessary to establish the private corporation, including
the filing of articles of incorporation consistent with the
privisions of this subtitle.
(3) Employees and officers of the Corporation (including
members of the Board of Directors) acting in accordance with
this section on behalf of the private corporation shall be
deemed to be acting in their official capacities as employees
or officers of the Corporation for purposes of section 205 of
title 18, United States Code.
(b) Status of the Private Corporation.--(1) The private
corporation shall not be an agency, instrumentality, or
establishment of the United States, a Government corporation,
or a Government-controlled corporation.
(2) Except as otherwise provided by this subtitle,
financial obligations of the private corporation shall not be
obligations of, or guaranteed as to principal or interest by,
the Corporation or the United States, and the obligations shall
so plainly state.
(3) No action under section 1491 of title 28, United States
Code, shall be allowable against the United States based on
actions of the private corporation.
(c) Application of Post-Government Employment
Restrictions.--Beginning on the privatization date, the
restrictions of sections 207(a), (b), (c), and (d) of title 18,
United States Code, shall not apply to the acts of an
individual done in carrying out official duties as a director,
officer, or employee of the private corporation, if the
individual was an officer or employee of the Corporation
(including a director) continuously during the 45 days prior to
the privatization date.
(d) Dissolution.--In the event that the privatization does
not occur, the Corporation will provide for the dissolution of
the private corporation within 1 year of the private
corporation's incorporation unless the Secretary of the
Treasury or his delegate, upon the Corporation's request,
agrees to delay any such dissolution for an additional year.
SEC. 3006. TRANSFERS TO THE PRIVATE CORPORATION.
Concurrent with privatization, the Corporation shall
transfer to the private corporation--
(1) the lease of the gaseous diffusion plants in
accordance with section 3007,
(2) all personal property and inventories of the
Corporation,
(3) all contracts, agreements, and leases under
section 3108(a),
(4) the Corporation's right to purchase power from
the Secretary under section 3008(b),
(5) such funds in accounts of the Corporation held by
the Treasury or on deposit with any bank or other
financial institution as approved by the Secretary of
the Treasury, and
(6) all of the Corporation's records, including all
of the papers and other documentary materials,
regardless of physical form or characteristics, made or
received by the Corporation.
SEC. 3007. LEASING OF GASEOUS DIFFUSION FACILITIES.
(a) Transfer of Lease.--Concurrent with privatization, the
Corporation shall transfer to the private corporation the lease
of the gaseous diffusion plants and related property for the
remainder of the term of such lease in accordance with the
terms of such lease.
(b) Renewal.--The private corporation shall have the
exclusive option to lease the gaseous diffusion plants and
related property for additional periods following the
expiration of the initial term of the lease.
(c) Exclusion of Facilities for Production of Highly
Enriched Uranium.--The Secretary shall not lease to the private
corporation any facilities necessary for the production of
highly enriched uranium but may, subject to the requirements of
the Atomic Energy Act of 1954 (42 U.S.C. 2011 et seq.), grant
the Corporation access to such facilities for purposes other
than the production of highly enriched uranium.
(d) DOE Responsibility for Preexisting Conditions.--The
payment of any costs of decontamination and decommissioning,
response actions, or corrective actions with respect to
conditions existing before July 1, 1993, at the gaseous
diffusion plants shall remain the sole responsibility of the
Secretary.
(e) Environmental Audit.--For purposes of subsection (d),
the conditions existing before July 1, 1993, at the gaseous
diffusion plants shall be determined from the environmental
audit conducted pursuant to section 1403(e) of the Atomic
Energy Act of 1954 (42 U.S.C. 2297c-2(e)).
(f) Treatment Under Price-Anderson Provisions.--Any lease
executed between the Secretary and the Corporation or the
private corporation, and any extension or renewal thereof,
under this section shall be deemed to be a contract for
purposes of section 170d. of the Atomic Energy Act of 1954 (42
U.S.C. 2210(d)).
(g) Waiver of EIS Requirement.--The execution or transfer
of the lease between the Secretary and the Corporation or the
private corporation, and any extension or renewal thereof,
shall not be considered a major Federal action significantly
affecting the quality of the human environment for purposes of
section 102 of the National Environmental Policy Act of 1969
(42 U.S.C. 4332).
SEC. 3008. TRANSFER OF CONTRACTS.
(a) Transfer of Contracts.--Concurrent with privatization,
the Corporation shall transfer to the private corporation all
contracts, agreements, and leases, including all uranium
enrichment contracts that were--
(1) transferred by the Secretary to the Corporation
pursuant to section 1401(b) of the Atomic Energy Act of
1954 (42 U.S.C. 2297c(b)), or
(2) entered into by the Corporation before the
privatization date.
(b) Nontransferable Power Contracts.--The Corporation shall
transfer to the private corporation the right to purchase power
from the Secretary under the power purchase contracts for the
gaseous diffusion plants executed by the Secretary before July
1, 1993. The Secretary shall continue to receive power for the
gaseous diffusion plants under such contracts and shall
continue to resell such power to the private corporation at
cost during the term of such contracts.
(c) Effects of Transfer.--(1) Notwithstanding subsection
(a), the United States shall remain obligated to the parties to
the contracts, agreements, and leases transferred under
subsection (a) for the performance of its obligations under
such contracts, agreements, or leases during their terms.
Performance of such obligations by the private corporation
shall be considered performance by the United States.
(2) If a contract, agreement, or lease transferred under
subsection (a) is terminated, extended, or materially amended
after the privatization date--
(A) the private corporation shall be responsible for
any obligation arising under such contract, agreement,
or lease after any extension or material amendment, and
(B) the United States shall be responsible for any
obligation arising under the contract, agreement, or
lease before the termination, extension, or material
amendment.
(3) The private corporation shall reimburse the United
States for any amount paid by the United States under a
settlement agreement entered into with the consent of the
private corporation or under a judgment, if the settlement or
judgment--
(A) arises out of an obligation under a contract,
agreement, or lease transferred under subsection (a),
and
(B) arises out of actions of the private corporation
between the privatization date and the date of a
termination, extension, or material amendment of such
contract agreement, or lease.
(d) Pricing.--The Corporation may establish prices for its
products, materials, and services provided to customers on a
basis that will allow it to attain the normal business
objectives of a profitmaking corporation.
SEC. 3009. LIABILITIES.
(a) Liability of the United States.--(1) Except as
otherwise provided in this subtitle, all liabilities arising
out of the operation of the uranium enrichment enterprise
before July 1, 1993, shall remain the direct liabilities of the
Secretary.
(2) Except as provided in subsection (a)(3) or otherwise
provided in a memorandum of agreement entered into by the
Corporation and the Office of Management and Budget prior to
the privatization date, all liabilities arising out of the
operation of the Corporation between July 1, 1993, and the
privatization date shall remain the direct liabilities of the
United States.
(3) All liabilities arising out of the disposal of depleted
uranium generated by the Corporation between July 1, 1993 and
privatization date shall become the direct liabilities of the
Secretary.
(4) Any stated or implied consent for the United States, or
any agent or officer of the United States, to be sued by any
person for any legal, equitable, or other relief with respect
to any claim arising out of, or resulting from, the
privatization of the Corporation is hereby withdrawn.
(5) To the extent that any claim against the United States
under this section is of the type otherwise required by Federal
statute or regulation to be presented to a Federal agency or
official for adjudication or review, such claim shall be
presented to the Department of Energy in accordance with the
procedures to be established by the Secretary. Nothing in this
paragraph shall be construed to impose on the Department of
Energy liability to pay any claim presented pursuant to this
paragraph.
(6) The Attorney General shall represent the United States
in any action seeking to impose liability under this
subsection.
(b) Liability of the Corporation.--Notwithstanding any
provision of any agreement to which the Corporation is a party,
the Corporation shall not be considered in breach, default, or
violation of any agreement because of the transfer of such
agreement to the private corporation under section 3008 or any
other action the Corporation is required to take under this
subtitle.
(c) Liability of the Private Corporation.--Except as
provided in this subtitle, the private corporation shall be
liable for any liabilities arising out of its operations after
the privatization date.
(d) Liability of Officers and Directors.--(1) No officer,
director, employee, or agent of the Corporation shall be liable
in any civil proceeding to any party in connection with any
action taken in connection with the privatization if, with
respect to the subject matter of the action, suit, or
proceeding, such person was acting within the scope of his
employment.
(2) This subsection shall not apply to claims arising under
the Securities Exchange Act of 1933 (15 U.S.C. 77a et seq.),
the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), or
under the Constitution or laws of any State, territory, or
possession of the United States relating to transactions in
securities.
SEC. 3010. EMPLOYEE PROTECTIONS.
(a) Contractor Employees.--(1) Privatization shall not
diminish the accrued, vested pension benefits of employees of
the Corporation's operating contractor at the two gaseous
diffusion plants.
(2) In the event that the private corporation terminates or
changes the contractor at either or both of the gaseous
diffusion plants, the plan sponsor or other appropriate
fiduciary of the pension plan covering employees of the prior
operating contractor shall arrange for the transfer of all plan
assets and liabilities relating to accrued pension benefits of
such plan's participants and beneficiaries from such plant to a
pension plan sponsored by the new contractor or the private
corporation or a joint labor-management plan, as the case may
be.
(3) In addition to any obligations arising under the
National Labor Relations Act, any employer (including the
private corporation if it operates a gaseous diffusion plant
without a contractor or any contractor of the private
corporation) at a gaseous diffusion plant shall--
(A) abide by the terms of any unexpired collective
bargaining agreement covering employees in bargaining
units at the plant and in effect on the privatization
date until the stated expiration or termination date of
the agreement; or
(B) in the event a collective bargaining agreement is
not in effect upon the privatization date, have the
same bargaining obligations under section 8(d) of the
National Labor Relations Act (29 U.S.C. 158(d)) as it
had immediately before the privatization date.
(4) If the private corporation replaces its operating
contractor at a gaseous diffusion plant, the new employer
(including the new contractor or the private corporation if it
operates a gaseous diffusion plant without a contractor)
shall--
(A) offer employment to non-management employees of
the predecessor contractor to the extent that their
jobs still exist or they are qualified for new jobs,
and
(B) abide by the terms of the predecessor
contractor's collective bargaining agreement until the
agreement expires or a new agreement is signed.
The provisions of subparagraphs (A) and (B) apply only to
replacements of operating contractors at the gaseous diffusion
plants during the first two years following the privatization
date (if any) and to the first bona fide replacement of an
operating contractor at a gaseous diffusion plant following the
expiration of that two year period. For purposes of this
paragraph, a replacement of an operating contractor is
considered to be ``bona fide'' unless it is made solely to
evade or avoid the provisions of subparagraphs (A) and (B).
(5) In the event of a plant closing or mass layoff (as such
terms are defined in section 2(a) (2) and (3) of the Worker
Adjustment and Retraining Notification Act (29 U.S.C.
2102(2)(2) and (3))) at either of the gaseous diffusion plants,
the Secretary of Energy shall treat any adversely affected
employee of an operating contractor at either plant who was an
employee at such plant on July 1, 1993, as a Department of
Energy employee for purposes of sections 3161 and 3162 of the
National Defense Authorization Act for Fiscal Year 1993 (42
U.S.C. 7274h-7274i).
(6)(A) The Secretary and the private corporation shall
cause the post-retirement health benefits plan provider (or its
successor) to continue to provide benefits for persons employed
by an operating contractor at either of the gaseous diffusion
plants in an economically efficient manner and at substantially
the same level of coverage as eligible retirees are entitled to
receive on the privatization date.
(B) Persons eligible for coverage under subparagraph (A)
shall be limited to:
(i) Persons who retired from active employment at one
of the gaseous diffusion plants on or before the
privatization date as vested participants in a pension
plan maintained either by the Corporation's operating
contractor or by a contractor employed prior to July 1,
1993, by the Department of Energy to operate a gaseous
diffusion plant.
(ii) Persons who are employed by the Corporation's
operating contractor on or before the privatization
date and are vested participants in a pension plan
maintained either by the Corporation's operating
contractor or by a contractor employed prior to July 1,
1993, by the Department of Energy to operate a gaseous
diffusion plant.
(C) The Secretary shall fund the entire cost of post-
retirement health benefits for persons who retired from
employment with an operating contractor prior to July 1, 1993.
(D) The Secretary and the Corporation shall fund the cost
of post-retirement health benefits for persons who retire from
employment with an operating contractor after July 1, 1993 in
proportion to the retired person's years and months of service
at a gaseous diffusion plant under their respective management.
(7)(A) Any suit under this subsection alleging a violation
of an agreement between an employer and a labor organization
shall be brought in accordance with section 301 of the Labor
Management Relations Act (29 U.S.C. 185).
(B) Any charge under this subsection alleging
an unfair labor practice violation of section 8
of the National Labor Relations Act (29 U.S.C.
158) shall be pursued in accordance with
section 10 of the National Labor Relations Act
(29 U.S.C. 160).
(C) Any suit alleging a violation of any
provision of this subsection, to the extent it
does not allege a violation of the National
Labor Relations Act, may be brought in any
district court of the United States having
jurisdiction of the parties, without regard to
the amount in controversy or the citizenships
of the parties.
(b) Former Federal Employees.--(1)(A) Employees of the
Corporation who were subject to either the Civil Service
Retirement System (CSRS) or the Federal Employees' Retirement
System (FERS) on the day immediately preceding the
privatization date shall elect--
(i) to retain their coverage under either CSRS or
FERS, as applicable, in lieu of coverage by the
Corporation's retirement system, or
(ii) to receive a deferred annuity or lump sum
benefit payable to a terminated employee under CSRS or
FERS, as applicable.
(B) Those employees electing subparagraph (A)(ii) shall
have the option to transfer the balance in their Thrift Savings
Plan account to a defined contribution plan under the
Corporation's retirement system, consistent with applicable law
and the terms of the Corporation's defined contribution plan.
(2) The Corporation shall pay to the Civil Service
Retirement and Disability Fund--
(A) such employee deductions and agency contributions
as are required by sections 8334, 8422, and 8423 of
title 5, United States Code, for those employees who
elect to retain their coverage under either CSRS or
FERS pursuant to paragraph (1);
(B) such additional agency contributions as are
determined necessary by the Office of Personnel
Management to pay, in combination with the sums under
subparagraph (A), the ``normal cost'' (determined using
dynamic assumptions) of retirement benefits for those
employees who elect to retain their coverage under CSRS
pursuant to paragraph (1), with the concept of ``normal
cost'' being used consistent with generally accepted
actuarial standards and principles; and
(C) such additional amounts, not to exceed two
percent of the amounts under subparagraphs (A) and (B),
as are determined necessary by the Office of Personnel
Management to pay the cost of administering retirement
benefits for employees who retire from the Corporation
after the privatization date under either CSRS or FERS,
for their survivors, and for survivors of employees of
the Corporation who die after the privatization date
(which amounts shall be available to the Office of
Personnel Management as provided in section
8348(a)(1)(B) of title 5, United States Code).
(3) The Corporation shall pay to the Thrift Savings Fund
such employee and agency contributions as are required by
section 8432 of title 5, United States Code, for those
employees who elect to retain their coverage under FERS
pursuant to paragraph (1).
(4) Any employee of the Corporation who was subject to the
Federal Employee Health Benefits Program (FEHBP) on the day
immediately preceding the privatization date and who elects to
retain coverage under either CSRS or FERS pursuant to paragraph
(1) shall have the option to receive health benefits from a
health benefit plan established by the Corporation or to
continue without interruption coverage under the FEHBP, in lieu
of coverage by the Corporation's health benefit system.
(5) The Corporation shall pay to the Employees Health
Benefits Fund--
(A) such employee deductions and agency contributions
as are required by section 8906 (a)-(f) of title 5,
United States Code, for those employees who elect to
retain their coverage under FEHBP pursuant to paragraph
(4); and
(B) such amounts as are determined necessary by the
Office of Personnel Management under paragraph (6) to
reimburse the Office of Personnel Management for
contributions under section 8906(g)(1) of title 5,
United States Code, for those employees who elect to
retain their coverage under FEHBP pursuant to paragraph
(4).
(6) The amounts required under paragraph (5)(B) shall pay
the Government contributions for retired employees who retire
from the Corporation after the privatization date under either
CSRS or FERS, for survivors of such retired employees, and for
survivors of employees of the Corporation who die after the
privatization date, with said amounts prorated to reflect only
that portion of the total service of such employees and retired
persons that was performed for the Corporation after the
privatization date.
SEC. 3011. OWNERSHIP LIMITATIONS.
No director, officer, or employee of the Corporation may
acquire directly or indirectly any securities, or any rights to
acquire any securities of the private corporation on terms more
favorable than those offered to the general public--
(1) in a public offering designed to transfer
ownership of the Corporation to private investors,
(2) pursuant to any agreement, arrangement, or
understanding entered into before the privatization
date, or
(3) before the election of the directors of the
private corporation.
SEC. 3012. URANIUM TRANSFERS AND SALES.
(a) Transfers and Sales by the Secretary.--The Secretary
shall not provide enrichment services or transfer or sell any
uranium (including natural uranium concentrates, natural
uranium hexafluoride, or enriched uranium in any form) to any
person except as consistent with this section.
(b) Russian HEU.--(1) On or before December 31, 1996, the
United States Executive Agent under the Russian HEU Agreement
shall transfer to the Secretary without charge title to an
amount of uranium hexafluoride equivalent to the natural
uranium component of low-enriched uranium derived from at least
18 metric tons of highly enriched uranium purchased from the
Russian Executive Agent under the Russian HEU Agreement. The
quantity of such uranium hexafluoride delivered to the
Secretary shall be based on a tails assay of 0.30 U235.
Uranium hexafluoride transferred to the Secretary pursuant to
this paragraph shall be deemed under U.S. law, for all purposes
to be of Russian origin.
(2) Within 7 years of the date of enactment of this
subtitle, the Secretary shall sell, and receive payment for,
the uranium hexafluoride transferred to the Secretary pursuant
to paragraph (1). Such uranium hexafluoride shall be sold--
(A) at any time for use in the United States for the
purpose of overfeeding;
(B) at any time for end use outside the United
States; or
(C) in calendar year 2001 for consumption by end
users in the United States not prior to January 1,
2002, in volumes not to exceed 3 million pounds
U3O8 equivalent per year.
(3) With respect to all enriched uranium delivered to the
United States Executive Agent under the Russian HEU Agreement
on or after January 1, 1997, the United States Executive Agent
shall, upon request of the Russian Executive Agent, enter into
an agreement to deliver concurrently to the Russian Executive
Agent an amount of uranium hexafluoride equivalent to the
natural uranium component of such uranium. An agreement
executed pursuant to a request of the Russian Executive Agent,
as contemplated in this paragraph, may pertain to any
deliveries due during any period remaining under the Russian
HEU Agreement. The quantity of such uranium hexafluoride
delivered to the Russian Executive Agent shall be based on a
tails assay of 0.30 U235. Title to uranium hexafluoride
delivered to the Russian Executive Agent pursuant to this
paragraph shall transfer to the Russian Executive Agent upon
delivery of such material to the Russian Executive Agent, with
such delivery to take place at a North American facility
designated by the Russian Executive Agent. Uranium hexafluoride
delivered to the Russian Executive Agent pursuant to this
paragraph shall be deemed under U.S. law for all purposes to be
of Russian origin. Such uranium hexafluoride may be sold to any
person or entity for delivery and use in the United States only
as permitted in subsections (b)(5), (b)(6) and (b)(7) of this
section.
(4) In the event that the Russian Executive Agent does not
exercise its right to enter into an agreement to take delivery
of the natural uranium component of any low-enriched uranium,
as contemplated in paragraph (3), within 90 days of the date
such low-enriched uranium is delivered to the United States
Executive Agent, then the United States Executive Agent shall
engage an independent entity through a competitive selection
process to auction an amount of uranium hexafluoride or
U3O8 (in the event that the conversion component of
such hexafluoride has previously been sold) equivalent to the
natural uranium component of such low-enriched uranium. Such
independent entity shall sell such uranium hexafluoride in one
or more lots to any person or entity to maximize the proceeds
from such sales, for disposition consistent with the
limitations set forth in this subsection. The independent
entity shall pay to the Russian Executive Agent the proceeds of
any such auction less all reasonable transaction and other
administrative costs. The quantity of such uranium hexafluoride
auctioned shall be based on a tails assay of 0.30 U235.
Title to uranium hexafluoride auctioned pursuant to this
paragraph shall transfer to the buyer of such material upon
delivery of such material to the buyer. Uranium hexafluoride
auctioned pursuant to this paragraph shall be deemed under U.S.
law for all purposes to be of Russian origin.
(5) Except as provided in paragraphs (6) and (7), uranium
hexafluoride delivered to the Russian Executive Agent under
paragraph (3) or auctioned pursuant to paragraph (4), may not
be delivered for consumption by end users in the United States
either directly or indirectly prior to January 1, 1998 and
thereafter only in accordance with the following schedule:
Annual Maximum Deliveries to End Users
Year: (millions lbs. U3O8 equivalent)
1998.............................................................. 3
1999.............................................................. 5
2000.............................................................. 7
2001.............................................................. 9
2002.............................................................. 11
2003.............................................................. 13
2004.............................................................. 15
2005.............................................................. 16
2006.............................................................. 17
2007.............................................................. 18
2008.............................................................. 19
2009 and each succeeding year..................................... 20
(6) Uranium hexafluoride delivered to the Russian
Executive Agent under paragraph (3) or auctioned
pursuant to paragraph (4) may be sold at any time as
Russian-origin natural uranium in a matched sale
pursuant to the Suspension Agreement, and in such case
shall not be counted against the annual maximum
deliveries set forth in paragraph (5).
(7) Uranium hexafluoride delivered to the Russian
Executive Agent under paragraph (3) or auctioned
pursuant to paragraph (4) may be sold at any time for
use in the United States for the purpose of overfeeding
in the operations of enrichment facilities.
(8) Nothing in this subsection (b) shall restrict the
sale of the conversion component of such uranium
hexafluoride.
(9) The Secretary of Commerce shall have
responsibility for the administration and enforcement
of the limitations set forth in this subsection. The
Secretary of Commerce may require any person to provide
any certifications, information, or take any action
that may be necessary to enforce these limitations. The
U.S. Customs Service shall maintain and provide any
information required by the Secretary of Commerce and
shall take any action requested by the Secretary of
Commerce which is necessary for the administration and
enforcement of the uranium delivery limitations set
forth in this section.
(10) The President shall monitor the actions of the
United States Executive Agent under the Russian HEU
Agreement and shall report to the Congress not later
than December 31 of each year on the effect the low-
enriched uranium delivered under the Russian HEU
Agreement is having on the domestic uranium mining,
conversion, and enrichment industries, and the
operation of the gaseous diffusion plants. Such report
shall include a description of actions taken or
proposed to be taken by the President to prevent or
mitigate any material adverse impact on such industries
or any loss of employment at the gaseous diffusion
plants as a result of the Russian HEU Agreement.
(11)(A) In the event that the President makes a
determination that a waiver under this subsection with
respect to the importation of highly enriched uranium
or low-enriched uranium derived from highly enriched
uranium extracted from nuclear weapons dismantled in
the Russian Federation and purchased from the Russian
Federation under a government-to-government agreement
is in the national security interest of the United
States, then such highly enriched uranium and low-
enriched uranium derived from highly enriched uranium,
including, within the limits established by this
section, the natural uranium component thereof and any
uranium products delivered pursuant to enrichment
contracts affected by such imports, shall not be
subject to title VII of the Tariff Act of 1930, to such
extent, for such period, and under such terms and
conditions as may be provided in the order making such
determination.
(B) No person shall have any cause of action or
defense based on this section, and no court shall have
jurisdiction to entertain challenges based on any
action taken by the President or the Secretary of
Commerce pursuant to this section or on an alleged
failure to take any such action.
(c) Transfers to the Corporation.--
(1) The Secretary shall transfer to the Corporation
without charge up to 50 metric tons of enriched uranium
and up to 7,000 metric tons of natural uranium from the
Department of Energy's stockpile, subject to the
restrictions in subsection (c)(2).
(2) The Corporation shall not deliver for commercial
end use in the United States--
(A) any of the uranium transferred under this
subsection before January 1, 1998;
(B) more than 10 percent of the uranium (by
uranium hexafluoride equivalent content)
transferred under this subsection or more than
4 million pounds, whichever is less, in any
calendar year after 1997; or
(C) more than 800,000 separative work units
contained in low-enriched uranium transferred
under this subsection in any calendar year.
(d) Inventory Sales.--(1) In addition to the transfers
authorized under subsections (c) and (e), the Secretary may,
from time to time, sell natural and low-enriched uranium
(including low-enriched uranium derived from highly enriched
uranium) from the Department of Energy's stockpile.
(2) Except as provided in subsections (b), (c), and (e), no
sale or transfer of natural or low-enriched uranium shall be
made unless--
(A) the President determines that the material is not
necessary to national security needs,
(B) the Secretary determines that the sale of the
material will not have an adverse material impact on
the domestic uranium mining, conversion, or enrichment
industry, taking into account the sales of uranium
under the Russian HEU Agreement and the Suspension
Agreement, and
(C) the price paid to the Secretary will not be less
than the fair market value of the material.
(e) Government Transfers.--Nothwithstanding subsection
(d)(2), the Secretary may transfer or sell enriched uranium--
(1) to a Federal agency if the material is
transferred for the use of the receiving agency without
any resale or transfer to another entity and the
material does not meet commercial specifications;
(2) to any person for national security purposes, as
determined by the Secretary; or
(3) to any State or local agency or nonprofit,
charitable, or educational institution for use other
than the generation of electricity for commercial use.
(f) Savings Provision.--Nothing in this subtitle shall be
read to modify the terms of the Russian HEU Agreement.
SEC. 3013. LOW-LEVEL WASTE.
(a) Responsibility of DOE.--(1) The Secretary, at the
request of the generator, shall accept for disposal low-level
radioactive waste, including depleted uranium if it were
ultimately determined to be low-level radioactive waste,
generated by--
(A) the Corporation as a result of the operations of
the gaseous diffusion plants or as a result of the
treatment of such wastes at a location other than the
gaseous diffusion plants, or
(B) any person licensed by the Nuclear Regulatory
Commission to operate a uranium enrichment facility
under sections 53, 63, and 193 of the Atomic Energy Act
of 1954 (42 U.S.C. 2073, 2093, and 2243).
(2) Except as provided in paragraph (3), the generator
shall reimburse the Secretary for the disposal of low-level
radioactive waste pursuant to paragraph (1) in an amount equal
to the Secretary's costs, including a pro rata share of any
capital costs, but in no event more than an amount equal to
that which would be charged by commercial, State, regional, or
interstate compact entities for disposal of such waste.
(3) In the event depleted uranium were ultimately
determined to be low-level radioactive waste, the generator
shall reimburse the Secretary for the disposal of depleted
uranium pursuant to paragraph (1) in an amount equal to the
Secretary's costs, including a pro rata share of any capital
costs.
(b) Agreements With Other Persons.--The generator may also
enter into agreements for the disposal of low-level radioactive
waste subject to subsection (a) with any person other than the
Secretary that is authorized by applicable laws and regulations
to dispose of such wastes.
(c) State or Interstate Compacts.--Notwithstanding any
other provision of law, no State or interstate compact shall be
liable for the treatment, storage, or disposal of any low-level
radioactive waste (including mixed waste) attributable to the
operation, decontamination, and decommissioning of any uranium
enrichment facility.
SEC. 3014. AVLIS.
(a) Exclusive Right To Commercialize.--The Corporation
shall have the exclusive commercial right to deploy the use any
AVLIS patents, processes, and technical information owned or
controlled by the Government, upon completion of a royalty
agreement with the Secretary.
(b) Transfer of Related Property to Corporation.--
(1) In general.--To the extent requested by
Corporation and subject to the requirements of the
Atomic Energy Act of 1954, the President shall transfer
without charge to the Corporation all of the right,
title, or interest in and to property owned by the
United States under control or custody of the Secretary
that is directly related to and materially useful in
the performance of the Corporation's purposes regarding
AVLIS and alternative technologies for uranium
enrichment, including--
(A) facilities, equipment, and materials and
research, development, and demonstration
activities; and
(B) all other facilities, equipment,
materials, processes, patents, technical
information of any kind, contracts, agreements,
and leases.
(2) Exception.--Facilities, real estate,
improvements, and equipment related to the gaseous
diffusion, and gas centrifuge, uranium enrichment
programs of the Secretary shall not transfer under
paragraph (1)(B).
(3) Expiration of transfer authority.--The
President's authority to transfer property under this
subsection shall expire upon the privatization date.
(c) Liability for Patent and Related Claims.--With respect
to any right, title, or interest provided to the Corporation
under subsection (a) or (b), the Corporation shall have sole
liability for any payments made or awards under section
157b.(3) of the Atomic Energy Act of 1954 (42 U.S.C.
2187(b)(3)), or any settlements or judgments involving claims
for alleged patent infringement. Any royalty agreement under
subsection (a) of this section shall provide for a reduction of
royalty payments to the Secretary to offset any payments,
awards, settlements, or judgments under this subsection.
SEC. 3015. APPLICATION OF CERTAIN LAWS.
(a) OSHA.--(1) As of the privatization date, the private
corporation shall be subject to and comply with the
Occupational Safety and Health Act of 1970 (29 U.S.C. 651 et
seq.).
(2) The Nuclear Regulatory Commission and the Occupational
Safety and Health Administration shall, within 90 days after
the enactment of this subtitle, enter into a memorandum of
agreement to govern the exercise of their authority over
occupational safety and health hazards at the gaseous diffusion
plants, including inspection, investigation, enforcement, and
rulemaking relating to such hazards.
(b) Antitrust Laws.--For purposes of the antitrust laws,
the performance by the private corporation of a ``matched
import'' contract under the Suspension Agreement shall be
considered to have occurred prior to the privatization date, if
at the time of privatization, such contract had been agreed to
by the parties in all material terms and confirmed by the
Secretary of Commerce under the Suspension Agreement.
(c) Energy Reorganization Act Requirements.--(1) The
private corporation and its contractors shall be subject to the
provisions of section 211 of the Energy Reorganization Act of
1974 (42 U.S.C. 5851) to the same extent as an employer subject
to such section.
(2) With respect to the operation of the facilities leased
by the private corporation, section 206 of the Energy
Reorganization Act of 1974 (42 U.S.C. 5846) shall apply of the
directors and officers of the private corporation.
SEC. 3016. AMENDMENTS OF THE ATOMIC ENERGY ACT.
(a) Repeal.--(1) Chapters 22 through 26 of the Atomic
Energy Act of 1954 (42 U.S.C. 1201-1608) are repealed as of the
privatization date.
(2) The table of contents of such Act is amended as of the
privatization date by striking the items referring to sections
repealed by paragraph (1).
(b) NRC Licensing.--(1) Section 11v. of the Atomic Energy
Act of 1954 (42 U.S.C. 2014v.) is amended by striking ``or the
construction and operation of a uranium enrichment facility
using Atomic Vapor Laser Isotope Separation technology''.
(2) Section 193 of the Atomic Energy Act of 1954 (42 U.S.C.
2243) is amended by adding at the end the following:
``(f) Limitation.--No license or certificate of compliance
may be issued to the United States Enrichment Corporation or
its successor under sections 53, 63, 193, or 1701, if in the
opinion of the Commission, the issuance of such a license or
certificate of compliance--
``(i) would be inimical to the common defense and
security of the United States; or
``(ii) would be inimical to the maintenance of a
reliable and economical domestic source of enrichment
services because of the nature and extent of the
ownership, control, or domination of the Corporation by
a foreign corporation or a foreign government or any
other relevant factors or circumstances.''.
(3) Section 1701(c)(2) of the Atomic Energy Act of 1954 (42
U.S.C. 2297f(c)(2) is amended to read as follows:
``(2) Periodic application for certificate of
compliance.--The Corporation shall apply to the Nuclear
Regulatory Commission for a certificate of compliance
under paragraph (1) periodically, as determined by the
Commission, by not less than every 5 years. The
Commission shall review any such application and any
determination made under subsection (b)(2) shall be
based on the results of any such review.''.
(4) Section 1702(a) of the Atomic Energy Act of 1954 (42
U.S.C. 2297f-1(a)) is amended--
(1) by striking ``other than'' and inserting
``including'', and
(2) by striking ``sections 53 and 63'' and inserting
``sections 53, 63, and 193''.
(c) Judicial Review of NRC Actions.--Section 189b. of the
Atomic Energy Act of 1954 (42 U.S.C. 2239(b)) is amended to
read as follows:
``b. The following Commission actions shall be subject to
judicial review in the manner prescribed in chapter 158 of
title 28, United States Code and chapter 7 of title 5, United
States Code:
``(1) Any final order entered in any proceeding of
the kind specified in subsection (a).
``(2) Any final order allowing or prohibiting a
facility to begin operating under a combined
construction and operation license.
``(3) Any final order establishing by regulation
standards to govern the Department of Energy's gaseous
diffusion uranium enrichment plants, including any such
facilities leased to a corporation established under
the USEC Privatization Act.
``(4) Any final determination relating to whether the
gaseous diffusion plants, including any such facilities
leased to a corporation established under the USEC
Privatization Act, are in compliance with the
Commission's standards governing the gaseous diffusion
plants and all applicable laws.''.
(d) Civil Penalties.--Section 234a. of the Atomic Energy
Act of 1954 (42 U.S.C. 2282(a)) is amended by--
(1) striking ``any licensing provision of sections
53, 57, 62, 63, 81, 82, 101, 103, 104, 107, or 109''
and inserting: ``any licensing or certification
provision of section 53, 57, 62, 63, 81, 82, 101, 103,
104, 107, 109, or 1701''; and
(2) by striking ``any license issued thereunder'' and
inserting: ``and license or certification issued
thereunder''.
(e) References to the Corporation.--Following the
privatization date, all references in the Atomic Energy Act of
1954 to the United States Enrichment Corporation shall be
deemed to be references to the private corporation.
SEC. 3017. AMENDMENTS TO OTHER LAWS.
(a) Definition of Government Corporation.--As of the
privatization date, section 9101(3) of title 31, United States
Code, is amended by striking subparagraph (N).
(b) Definition of the Corporation.--Section 1018(1) of the
Energy Policy Act of 1992 (42 U.S.C. 2296b-7(1)) is amended by
adding immediately before the period ``, or its successor''.
(b) Repeal of Prior Conditional Enactment.--Section
8114A(b) of Public Law 103-335 (108 Stat. 2648) is repealed.
Subtitle B--Naval Petroleum Reserves Privatization
SEC. 4101. SHORT TITLE.
This subtitle may be cited as the ``Naval Petroleum
Reserves Privatization Act''.
PART I--DEFINITIONS, APPLICABILITY OF TITLES
SEC. 4111. DEFINITIONS.
For the purposes of this subtitle:
(a) ``Department'' means the United States Department
of Energy.
(b) ``Naval petroleum reserves'' (referred to in this
subtitle as ``the Reserves'') means Naval Petroleum
Reserve Numbered 1 (Elk Hills), located in Kern County,
California, established by Executive order of the
President, dated September 2, 1912; Naval Petroleum
Reserve Numbered 2 (Buena Vista), located in Kern
County, California, established by Executive order of
the President, dated December 13, 1912; Navel Petroleum
Reserve Numbered 3 (Teapot Dome), located in Wyoming,
established by Executive order of the President, dated
April 30, 1915; Oil Shale Reserve Numbered 1, located
in Colorado, established by Executive order of the
President, dated December 6, 1916, as amended by
Executive order dated June 12, 1919; and Oil Shale
Reserve Numbered 3, located in Colorado, established by
Executive order of the President, dated September 27,
1924.
(c) ``Petroleum'' includes crude oil, gases
(including natural gas), natural gasoline, and other
related hydrocarbons, oil shale, and the products of
any of such resources.
(d) ``Secretary'' means the Secretary of Energy.
(e) ``Unit Plan Contract'' means the agreement of
June 19, 1944 between the Department and Chevron
U.S.A., Inc.
SEC. 4112. APPLICABILITY OF TITLES.
(a) Parts 1, 2, and 4, of this subtitle take effect upon
enactment of this subtitle.
PART II--PRIVATIZATION
SEC. 4121. PRIVATIZATION PLAN AND IMPLEMENTATION.
(a) Preparation of Plan.--
(1) The Secretary shall prepare not later than March
31, 1997, in consultation with the Secretary of the
Treasury, a plan for selling Naval Petroleum Reserve
Numbered 1 and for selling or leasing the remaining
Reserves out of Federal ownership, in fiscal year 2002.
(2) The plan shall include consideration of
alternative means for selling Naval Petroleum Reserve
Numbered 1 and for selling or leasing the remaining
Reserves. The plan shall include the estimated return
on the Government's investment in the Reserves
achievable through each sale or lease alternative and
shall include the Secretary's recommendation on the
preferred means of selling or leasing the Reserves. The
plan shall specify a minimum acceptable price for the
Reserves, which is not less than the net present value
of the sum of the:
(A) anticipated revenue stream that the
Secretary, in consultation with the Secretary
of the Treasury, determines the Treasury would
receive from the Reserves if they were not sold
or leased, and
(B) the payments due under subsection (g).
The minimum acceptable price may be adjusted by
the Secretary for relevant economic factors
after consideration of the results of the
studies conducted under subsection (c) of this
section.
(b) Presidential Approval.--The Secretary shall submit the
plan to the President not later than March 31, 1997. The
President may modify the minimum acceptable price in the plan,
or otherwise modify the plan. The President shall approve the
plan with or without modifications by June 30, 1997. When the
plan is approved with or without modification by the President,
the Secretary shall implement the plan. Not later than the end
of fiscal year 2002 the Secretary of Energy shall enter into
one or more contracts for the sale of all rights, title, and
interest of the United States in and to all lands owned or
controlled by the United States inside Naval Petroleum Reserve
Numbered 1.
(c) Acquisition of Service.--The Secretary may enter into
contracts on a non-competitive basis for studies relating to
the preparation or implementation of the plan.
(d) Equity Shares in Naval Petroleum Reserve Numbered 1.--
(1) Not later than five months after the effective
date, the Secretary shall finalize equity interests of
the known oil and gas zones in Naval Petroleum Reserve
Numbered 1 in the manner provided by this subsection.
(2) The Secretary shall retain the services of an
independent petroleum engineer, mutually acceptable to
the equity owners, who shall prepare a recommendation
on final equity figures. The Secretary may accept the
recommendation of the independent petroleum engineer
for final equity in each known oil and gas zone and
establish final equity interest in Naval Petroleum
Reserve Numbered 1 in accordance with the
recommendation, or the Secretary may use such other
method to establish final equity interest in the
reserve as the Secretary considers appropriate.
(3) If, on the effective date, there is an ongoing
equity redetermination dispute between the equity
owners under section 9(b) of the unit plan contract,
the dispute shall be resolved in the manner provided in
the unit plan contract within five months after the
effective date. The resolution shall be considered
final for all purposes under this section.
(e) Future Liabilities.--To effectuate the sale of the
interest of the United States in Naval Petroleum Reserve
Numbered 1, the Secretary may extend such indemnities and
warranties as the Secretary considers reasonable and necessary
to protect the purchaser from claims arising from the ownership
in the reserve by the United States.
(f) Deposit of Proceeds.--Proceeds from the sale or lease
of the Reserves under this subtitle shall be deposited into
miscellaneous receipts in the Treasury.
(g) Revenue Sharing With the State of California.--
Notwithstanding any other law, the Secretary of the Treasury
shall pay to the State of California (to be credited by the
State to the Supplemental Benefits Maintenance Account within
the Teachers' Retirement Fund) seven percent of proceeds from
the sale of Naval Petroleum Reserve Numbered 1. The State of
California share (seven percent of proceeds) shall be paid in
annual installments of 2.25 percent of the share in each fiscal
year from the date of sale for 9 fiscal years, and 25.75 of the
share in the tenth fiscal year. Payments under this subsection
may begin upon a release of all claims against the United
States by the State of California and the Teachers' Retirement
Fund with respect to production and proceeds of sale from Naval
Petroleum Reserve Numbered 1.
(h) Expenditures for Sale or Lease.--(1) Section 501 of
Public Law 101-45 is hereby repealed.
(2) Unobligated balances in the Naval Petroleum and Oil
Shale Reserves account shall be used for necessary expenses
related to sale of lease of the reserves.
(a) Effect on Existing Contracts.--(1) In the case of any
contract, in effect on the effective date, for the purchase of
production from any part of the United States' share of Naval
Petroleum Reserve Numbered 1, the sale of the interest of the
United States in the reserve shall be subject to the contract
for a period of three months after the closing date of the sale
or until termination of the contract, whichever occurs first.
The term of any contract entered into after the effective date
for the purchase of the production shall not exceed the
anticipated closing date for the sale of the reserve.
(2) The Secretary shall exercise the termination procedures
provided in the contract between the United States and Bechtel
Petroleum Operations, Inc., Contract Number DE-ACO1-85FE60520
or in any subsequent management and operating contract so that
the contract terminates not later than the date of closing of
the sale of Naval Petroleum Reserve Numbered 1 under section
3412.
(3) The Secretary shall exercise the termination procedures
provided in the unit plan contract so that the unit plan
contract terminates not later than the date of closing of the
sale reserve.
(b) Effect on Antitrust Laws.--Nothing in this subtitle
shall be construed to alter the application of the antitrust
laws of the United States to the purchaser or purchasers (as
the case may be) of Naval Petroleum Reserve Numbered 1 or to
the lands in the reserve subject to sale or lease under Section
4121 upon the completion of the sale or lease.
(c) Preservation of Private Right, Title, and Interest.--
Nothing in this subtitle shall be construed to adversely affect
the ownership interest of any other entity having any right,
title, and interest in and to lands within the boundaries of
Naval Petroleum Reserve Numbered 1 and which are subject to the
unit plan contract.
The Secretary may transfer to the purchaser or purchasers
(as the case may be) of Naval Petroleum Reserve Numbered 1 the
incidental take permit regarding the reserve issued to the
Secretary by the United States Fish and Wildlife Serve and in
effect on the effective date if the Secretary determines that
transfer of the permit is necessary to expedite the sale of the
reserve in a manner that maximized the value of the sale to the
United States. The transferred permit shall cover the identical
activities, and shall be subject to the same terms and
conditions, as apply to the permit at the time of the transfer.
SEC. 4122. RELATIONSHIP TO BALANCED BUDGET AND EMERGENCY DEFICIT
CONTROL ACT OF 1985.
If the President so designates, the net proceeds from
privatizing the Reserves under this subtitle shall be included
in the budget baseline required by the Balanced Budget and
Emergency Deficit Control Act of 1985 and shall be counted for
the purposes of section 252 of that Act as an offset to direct
spending notwithstanding section 257(a) of the Act.
SEC. 4123. DISCRETIONARY SPENDING LIMITS.
(a) Upon sale of the NPR Numbered 1 the discretionary
spending limits set forth in section 601(a)(2) of the
Congressional Budget Act of 1974 (2 U.S.C. 665(a)(2)) (as
adjusted in conformance with section 251 of the Balanced Budget
and Emergency Deficit Control Act of 1985) for fiscal year 2003
are reduced as follows:
for fiscal year 2002 for the discretionary category:
$158 million in new budget authority and $166 million
in outlays.
(b) For fiscal year 2004, the comparable amount for
budgetary purposes is considered to be $158 million in new
budget authority and $166 million in outlays. For fiscal year
2005 the comparable amount for budgetary purposes is considered
to be $158 million in new budget authority and $166 million in
outlays.
PART III--OIL SHALE RESERVE NUMBERED 2
SEC. 4131. TRANSFER.
Subject to sections 4132 and 4133 of this subtitle, the
functions vested in the Secretary with regard to Oil Shale
Reserve Numbered 2 (located in Utah, established by Executive
order of the President dated December 6, 1916) by chapter 641
of title 10, United States Code, as amended by section 501 of
this Act, are transferred to and vested in the Secretary of the
Interior.
SEC. 4132. GREEN RIVER AREA.
(a) Report and Management of Area.--The Secretary of the
Interior shall study and submit to the President a report on
the appropriateness of including the Green River area within
the national wild and scenic rivers system. During the study
period, the Secretary of the Interior shall manage the Green
River area in a manner consistent with the memorandum of
understanding between the Department of Energy and the
Department of the Interior under which the reserve is being
currently managed.
(b) For purposes of this section, ``Green River area''
means the following area within Oil Shale Reserve Numbered 2:
The segments of the Green River that are within the boundaries
of Oil Shale Reserve Numbered 2, which include the
approximately 11.6 mile segment of the Green River extending
from the northern boundary of Oil Shale Reserve Numbered 2 near
Duchess Hole to the western boundary of Oil Shale Reserve
Numbered 2 near Rock House Bottom and the approximately .6 mile
segment of the Green River in Oil Shale Reserve Numbered 2 near
the base of Peters Point, and the area extending one-half mile
from the river on each side of these segments.
SEC. 4133. UINTAH AND OURAY INDIAN RESERVATION.
Nothing in this subtitle affects any interest in, or right
or obligation respecting, the Uintah and Ouray Indian
Reservation.
PART IV--MISCELLANEOUS
SEC. 4151. AMENDMENTS TO CHAPTER 641 OF TITLE 10, UNITED STATES CODE.
Chapter 641 of title 10, United States Code, is amended:
(a) in the table of contents, by renaming section
7438 ``Mining and removal of oil shale.'';
(b) in section 7420, by striking paragraph (6);
(c) in section 7421(a), by striking ``for national
defense purposes, except as otherwise provided in this
chapter'';
(d) by amending section 7422 to read as follows:
``(a) Prior to privatization, the Secretary,
directly or by contract, lease, or otherwise,
shall explore, prospect, conserve, develop,
use, produce, and operate the naval petroleum
reserves to maximize the economic value of
these properties to the Nation, except that no
petroleum leases shall be granted at Naval
Petroleum Reserves Numbered 1 and 3.
``(b) The Secretary shall dispose of the
United States' share of petroleum produced from
the naval petroleum reserves in accordance with
section 7430 of this chapter.
``(c) The Secretary may construct, acquire,
or contract for the use of storage and shipping
facilities, and pipelines and associated
facilities, on and off the naval petroleum
reserves, for transporting petroleum to
locations where it will be refined or shipped.
``(d) The Secretary may store petroleum owned
or managed by other Federal agencies and
instrumentalities, for appropriate
reimbursement reasonably reflecting fair market
value.
``(e) The Secretary may acquire a pipeline in
the vicinity of a naval petroleum reserve not
otherwise operated as a common carrier, by
condemnation, if necessary, if the pipeline
owner refuses to accept, convey, and transport
petroleum produced at that reserve without
discrimination and at reasonable rates. The
Secretary may acquire rights-of-way for new
pipelines and associated facilities by eminent
domain under the Act of February 26, 1931 (40
U.S.C. 258a-258e), and the prospective holder
of the right-of-way is ``the authority
empowered by law to acquire the lands'' within
the meaning of that Act. New pipelines shall
accept, convey, and transport any petroleum
produced at the naval petroleum reserves at
reasonable rates as a common carrier,'';
(e) in section 7423, by striking ``when that
production is authorized under section 7422 of this
title'';
(f) in section 7425(a), by striking ``, with the
approval of the President,'';
(g) in section 7426, as follows:
(1) by striking ``Subject to the provisions
of section 7422(c) of this title, the'' and
inserting ``The'' in subsection (a),
(2) by inserting ``as is fixed, or'' after
``contract,'' in subsection (b), and
(3) by striking ``than having petroleum
produced for national defense'' and inserting
``producing petroleum'' in subsection (c);
(h) in section 7427, by striking ``, with the consent
of the President,'';
(i) in section 7428, by striking ``approval by the
President and to'';
(j) in section 7429, by striking ``If any such land
is to be re-leased, the'' and inserting ``The'';
(k) in section 7430, as follows:
(l) by amending subsection (b)(2) to read as follows:
``(2) The Secretary may not sell any part of the
United States share of petroleum produced from Naval
Petroleum Reserves Numbered 1, 2, and 3 for less than
the Secretary's estimate of the current sales price of
comparable petroleum in the same area.'',
(2) by striking ``Naval Petroleum Reserves
Numbered 1 or Numbered 3'' and inserting ``the
naval petroleum reserves'' in subsection (j),
(3)(A) by amending subsection (l)(1) to read
as follows: ``Notwithstanding any other
provision of this chapter (but subject to
paragraph (2)), the Secretary may provide any
portion of the United States share of petroleum
to any other Federal agency or instrumentality
for its use in order to meet petroleum product
requirements of the Federal Government.'';
(B) by striking ``the Department of Defense''
and inserting ``any other Federal agency or
instrumentality'' and striking ``Secretary of
Defense'' and inserting ``other Federal
agencies and instrumentalities'' in subsection
(l)(2); and
(C) by striking ``exchange'' and inserting
``transaction'' in subsection (l)(3), and
(4) by striking subsections (c), (d), (e),
(f), (g), (h), and (i);
(l) in section 7431, as follows:
(1) by striking ``and approval'' in the catch
line,
(2) by striking ``and the President's
approval must be obtained'' in subsection (a),
(3) by striking 11 and Presidential approval
are'' and inserting ``is'' in subsection
(a)(2), and
(4) by striking subsections (a)(3), and (c);
(m) by amending section 7432 to read as follows:
``Sec. 7432. Production Enhancement
``Not more than $60 million of the United States share of
amounts collected in fiscal year 1996 under the Emergency
Petroleum Allocation Act of 1973 (15 U.S.C. Sec. 751 et seq.)
may be used to enhance production from the Reserves in that
fiscal year, to the extent provided in an appropriations
Act.'';
(n) by amending section 7434 to read as follows: ``Prior to
privatization, the Secretary shall submit a report to the
Committee on Armed Services of the Senate and the Committee on
National Security of the House of Representatives, within 270
days of the end of each fiscal year, on production from the
naval petroleum reserves for the preceding fiscal year and on
other naval petroleum reserves matters the Secretary considers
appropriate.''; and
(o) by amending section 7438 to read as follows:
``Sec. 7438. Mining and removal of oil shale
``(a) Except as provided in title III of the Naval
Petroleum Reserves Privatization Act, prior to privatization
the Secretary may mine and remove, or authorize the mining and
removal of, oil shale or oil shale products from Oil Shale
Reserves Numbered 1, 2, and 3 needed for the national defense
or for research, development, test, evaluation, and
demonstration work, at prices and under other terms that the
Secretary directs.
``(b) This section is not intended to authorize the
commercial development and operation of the naval oil shale
reserves by the Government in competition with private
industry.''.
SEC. 4132. CONFORMING AMENDMENTS AND REPEALERS.
(a) Section 2 of Pub. L. No. 96-137, 93 Stat. 1061 (1979)
(42 U.S.C. 7156a) is repealed.
(b) Section 501 of the Dire Emergency Supplemental
Appropriations and Transfers, Urgent Supplementals, and
correcting Enrollment Errors Act of 1989 (10 U.S.C. 7431 note)
is repealed.
(c) Chapter 641 of title 10 United States Code ceases to
apply to any Reserve that is privatized.
CHAPTER 2--DEPARTMENT OF ENERGY
SEC. 5221. SALE OF DOE ASSETS.
(a) Asset Management and Disposition Program.--
(1) In general.--In order to maximize the use of
Department of Energy assets and to reduce overhead and
other costs related to asset management at the
Department's facilities and laboratories, the Secretary
of Energy shall conduct an asset management and
disposition program that will result in not less than
$225,000,000 in receipts and savings by October 1,
2000.
(2) Items to be included.--The program shall include
an inventory of assets in the care of the Department
and its contractors; the recovery, reuse, and
stewardship of assets; and disposition of a minimum of
1,139,000,000 pounds of fuel, 136,000 tons of chemicals
and industrial gases, 557,000 tons of scrap metal,
14,000 radiation sources, 17,000 pieces of major
equipment, 11,000 pounds of precious metals, and
91,000,000 pounds of base metals.
(b) Federal Property and Adminstrative Services Act.--The
disposition of assets under this section is not subject to
section 202 or 203 of the Federal Property and Administrative
Services Act of 1949 (40 U.S.C. 483, 484) or section 13 of the
Surplus Property Act of 1944 (50 U.S.C. App. 1622). In order to
avoid market disruptions, the Secretary shall consult with
appropriate executive agencies with respect to dispositions
under this section.
(c) Disposition of Proceeds.--After deduction of
administrative costs of disposition under this section not to
exceed $7,000,000 per year, the remainder of the proceeds from
dispositions under this subpart shall be returned to the
Treasury as miscellaneous receipts. There shall be established
a new receipt account in the Treasury for proceeds of asset
sales under this section.
SEC. 5222. SALE OF WEEKS ISLAND OIL.
Notwithstanding section 161 of the Energy Policy and
Conservation Act (42 U.S.C. 6241), the Secretary of Energy
shall draw down and sell 32,000,000 barrels of oil contained in
the Weeks Island Strategic Petroleum Reserve Facility. The
Secretary shall, to the greatest extent practicable, sell oil
from the reserve in a manner that minimizes the impact of such
sale upon supply levels and market forces.
SEC. 5223. LEASE OF EXCESS STRATEGIC PETROLEUM RESERVE CAPACITY.
(a) Amendment.--Part B of title I of the Energy Policy and
Conservation Act (42 U.S.C. 6231 et seq.) is amended by adding
at the end the following:
``USE OF UNDERUTILIZED FACILITIES
``Sec. 168. (a) Authority.--Notwithstanding any other
provision of this title, the Secretary, by lease or otherwise,
for any term and under such other conditions as the Secretary
considers necessary or appropriate, may store in underutilized
Strategic Petroleum Reserve facilities petroleum product owned
by a foreign government or its representative. Petroleum
products stored under this section are not part of the
Strategic Petroleum Reserve and may be exported without license
from the United States.
``(b) Protection of Facilities.--All agreements entered into
pursuant to subsection (a) shall contain provisions providing
for fees to fully compensate the United States for all costs of
storage and removals of petroleum products, including the cost
of replacement facilities necessitated as a result of any
withdrawals.
``(c) Access to Stored Oil.--The Secretary shall ensure that
agreements to store petroleum products for foreign governments
or their representatives do not affect the ability of the
United States to withdraw, distribute, or sell petroleum from
the Strategic Petroleum reserve in response to an energy
emergency or to the obligations of the United States under the
Agreement on an International Energy Program''.
(b) Table of Contents Amendment.--The table of contents of
part B of title I of the Energy Policy and Conservation Act is
amended by adding at the end the following:
``Sec. 168. Use of underutilized facilities.''.
Subtitle C--Natural Resources
Subchapter B--Helium Reserves
SEC. 5311. SHORT TITLE.
This subchapter may be cited as the ``Helium Act of 1995''.
SEC. 5312. AMENDMENT OF HELIUM ACT.
Except as otherwise expressly provided, whenever in this
chapter an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a section or other provision, the
reference shall be considered to be made to a section or other
provision of the Helium Act (50 U.S.C. 167 to 167n).
SEC. 5313. AUTHORITY OF SECRETARY.
Sections 3, 4, and 5 are amended to read as follows:
``SEC. 3. AUTHORITY OF SECRETARY.
``(a) Extraction and Disposal of Helium on Federal Lands.--
``(1) In general.--The Secretary may enter into
agreements with private parties for the recovery and
disposal of helium on Federal lands upon such terms and
conditions as the Secretary deems fair, reasonable, and
necessary.
``(2) Leasehold rights.--The Secretary may grant
leasehold rights to any such helium.
``(3) Limitation.--The Secretary may not enter into
any agreement by which the Secretary sells such helium
other than to a private party with whom the Secretary
has an agreement for recovery and disposal of helium.
``(4) Regulations.--Agreements under paragraph (1)
may be subject to such regulations as may be prescribed
by the Secretary.
``(5) Existing rights.--An agreement under paragraph
(1) shall be subject to any rights of any affected
Federal oil and gas lessee that may be in existence
prior to the date of the agreement.
``(6) Terms and conditions.--An agreement under
paragraph (1) (and any extension or renewal of an
agreement) shall contain such terms and conditions as
the Secretary may consider appropriate.
``(7) Prior agreements.--This subsection shall not in
any manner affect or diminish the rights and
obligations of the Secretary and private parties under
agreements to dispose of helium produced from Federal
lands in existence on the date of enactment of the
Helium Act of 1995 except to the extent that such
agreements are renewed or extended after that date.
``(b) Storage, Transportation and Sale.--The Secretary may
store, transport, and sell helium only in accordance with this
Act.
``SEC. 4. STORAGE, TRANSPORTATION, AND WITHDRAWAL OF CRUDE HELIUM.
``(a) Storage, Transportation and Withdrawal.--The Secretary
may store, transport and withdraw crude helium and maintain and
operate crude helium storage facilities, in existence on the
date of enactment of the Helium Act of 1995 at the Bureau of
Mines Cliffside Field, and related helium transportation and
withdrawal facilities.
``(b) Cessation of Production, Refining, and Marketing.--Not
later than 18 months after the date of enactment of the Helium
Act of 1995, the Secretary shall cease producing, refining, and
marketing refined helium and shall cease carrying out all other
activities relating to helium which the Secretary was
authorized to carry out under this Act before the date of
enactment of the Helium Act of 1995, except activities
described in subsection (a).
``(c) Disposal of Facilities.--
``(1) In general.--Subject to paragraph (5), not
later than 24 months after the cessation of activities
referred to in section (b) of this section, the
Secretary shall designate as excess property and
dispose of all facilities, equipment, and other real
and personal property, and all interests therein, held
by the United States for the purpose of producing,
refining and marketing refined helium.
``(2) Applicable law.--The disposal of such property
shall be in accordance with the Federal Property and
Administrative Services Act of 1949.
``(3) Proceeds.--All proceeds accruing to the United
States by reason of the sale or other disposal of such
property shall be treated as moneys received under this
chapter for purposes of section 6(f).
``(4) Costs.--All costs associated with such sale and
disposal (including costs associated with termination
of personnel) and with the cessation of activities
under subsection (b) shall be paid from amounts
available in the helium production fund established
under section 6(f).
``(5) Exception.--Paragraph (1) shall not apply to
any facilities, equipment, or other real or personal
property, or any interest therein, necessary for the
storage, transportation and withdrawal of crude helium
or any equipment, facilities, or other real or personal
property, required to maintain the purity, quality
control, and quality assurance of crude helium in the
Bureau of Mines Cliffside Field.
``(d) Existing Contracts.--
``(1) In general.--All contracts that were entered
into by any person with the Secretary for the purchase
by the person from the Secretary of refined helium and
that are in effect on the date of the enactment of the
Helium Act of 1995 shall remain in force and effect
until the date on which the refining operations cease,
as described in subsection (b).
``(2) Costs.--Any costs associated with the
termination of contracts described in paragraph (1)
shall be paid from the helium production fund
established under section 6(f).
``SEC. 5. FEES FOR STORAGE, TRANSPORTATION AND WITHDRAWAL.
``(a) In General.--Whenever the Secretary provides helium
storage withdrawal or transportation services to any person,
the Secretary shall impose a fee on the person to reimburse the
Secretary for the full costs of providing such storage,
transportation, and withdrawal.
``(b) Treatment.--All fees received by the Secretary under
subsection (a) shall be treated as moneys received under this
Act for purposes of section 6(f).''.
SEC. 5314. SALE OF CRUDE HELIUM.
(a) Subsection 6(a) is amended by striking ``from the
Secretary'' and inserting ``from persons who have entered into
enforceable contracts to purchase an equivalent amount of crude
helium from the Secretary''.
(b) Subsection 6(b) is amended--
(1) by inserting ``crude'' before ``helium''; and
(2) by adding the following at the end: ``Except as
may be required by reason of subsection (a), sales of
crude helium under this section shall be in amounts as
the Secretary determines, in consultation with the
helium industry, necessary to carry out this subsection
with minimum market disruption.''.
(c) Subsection 6(c) is amended--
(1) by inserting ``crude'' after ``Sales of''; and
(2) by striking ``together with interest as provided
in this subsection'' and all that follows through the
end of the subsection and inserting ``all funds
required to be repaid to the United States as of
October 1, 1995 under this section (referred to in this
subsection as `repayable amounts'). The price at which
crude helium is sold by the Secretary shall not be less
than the amount determined by the Secretary by--
``(1) dividing the outstanding amount of such
repayable amounts by the volume (in million cubic feet)
of crude helium owned by the United States and stored
in the Bureau of Mines Cliffside Field at the time of
the sale concerned, and
``(2) adjusting the amount determined under paragraph
(1) by the Consumer Price Index for years beginning
after December 31, 1995.''.
(d) Subsection 6(d) is amended to read as follows:
``(d) Extraction of Helium From Deposits on Federal Lands.--
All moneys received by the Secretary from the sale or
disposition of helium on Federal lands shall be paid to the
Treasury and credited against the amounts required to be repaid
to the Treasury under subsection (c).''.
(e) Subsection 6(e) is repealed.
(f) Subsection 6(f) is amended--
(1) by striking ``(f)'' and inserting ``(e)(1)''; and
(2) by adding the following at the end:
``(2)(A) Within 7 days after the commencement of each
fiscal year after the disposal of the facilities referred to in
section 4(c), all amounts in such fund in excess of $2,000,000
(or such lesser sum as the Secretary deems necessary to carry
out this Act during such fiscal year) shall be paid to the
Treasury and credited as provided in paragraph (1).
``(B) On repayment of all amounts referred to in subsection
(c), the fund established under this section shall be
terminated and all moneys received under this Act shall be
deposited in the general fund of the Treasury.''.
SEC. 5315. ELIMINATION OF STOCKPILE.
Section 8 is amended to read as follows:
``SEC. 8. ELIMINATION OF STOCKPILE.
``(a) Stockpile Sales.--
``(1) Commencement.--Not later than January 1, 2005,
the Secretary shall commence offering for sale crude
helium from helium reserves owned by the United States
in such amounts as would be necessary to dispose of all
such helium reserves in excess of 600,000,000 cubic
feet on a straight-line basis between such date and
January 1, 2015.
``(2) Times of sale.--The sales shall be at such
times during each year and in such lots as the
Secretary determines, in consultation with the helium
industry, to be necessary to carry out this subsection
with minimum market disruption.
``(3) Price.--The price for all sales under paragraph
(1), as determined by the Secretary in consultation
with the helium industry, shall be such price as will
ensure repayment of the amounts required to be repaid
to the Treasury under section 6(c).
``(b) Discovery of Additional Reserves.--The discovery of
additional helium reserves shall not affect the duty of the
Secretary to make sales of helium under subsection (a).''.
SEC. 5316. REPEAL OF AUTHORITY TO BORROW.
Sections 12 and 15 are repealed.
SEC. 5317. LAND CONVEYANCE IN POTTER COUNTY, TEXAS.
(a) In General.--The Secretary of the Interior shall
transfer all right, title, and interest of the United States in
and to the parcel of land described in subsection (b) to the
Texas Plains Girl Scout Council for consideration of $1,
reserving to the United States such easements as may be
necessary for pipeline rights-of-way.
(b) Land Description.--The parcel of land referred to in
subsection (a) is all those certain lots, tracts or parcels of
land lying and being situated in the County of Potter and State
of Texas, and being the East Three Hundred Thirty-One (E331)
acres out of Section Seventy-eight (78) in Block Nine (9), B.S.
& F. Survey, (some times known as the G.D. Landis pasture)
Potter County, Texas, located by certificate No. 1/39 and
evidenced by letters patents Nos. 411 and 412 issued by the
State of Texas under date of November 23, 1937, and of record
in Vol. 66A of the Patent Records of the State of Texas. The
metes and bounds description of such lands is as follows:
(1) First tract.--One Hundred Seventy-one (171) acres
of land known as the North part of the East part of
said survey Seventy-eight (78) aforesaid, described by
metes and bounds as follows:
Beginning at a stone 20 x 12 x 3 inches marked X, set
by W.D. Twichell in 1905, for the Northeast corner of
this survey and the Northwest corner of Section 59;
Thence, South 0 degrees 12 minutes East with the West
line of said Section 59, 999.4 varas to the Northeast
corner of the South 160 acres of East half of Section
78;
Thence, North 89 degrees 47 minutes West with the
North line of the South 150 acres of the East half,
956.8 varas to a point in the East line of the West
half Section 78;
Thence, North 0 degrees 10 minutes West with the East
line of the West half 999.4 varas to a stone 18 x 14 x
3 inches in the middle of the South line of Section 79;
Thence, South 89 degrees 47 minutes East 965 varas to
the place of beginning.
(2) Second tract.--One Hundred Sixty (160) acres of
land known as the South part of the East part of said
survey No. Seventy-eight (78) described by metes and
bounds as follows:
Beginning at the Southwest corner of Section 59, a
stone marked X and a pile of stones; Thence, North 89
degrees 47 minutes West with the North line of Section
77, 966.5 varas to the Southeast corner of the West
half of Section 78; Thence, North 0 degrees 10 minutes
West with the East line of the West half of Section 78;
Thence, South 89 degrees 47 minutes East 965.8 varas
to a point in the East line of Section 78;
Thence, South 0 degrees 12 minutes East 934.6 varas
to the place of beginning.
Containing an area of 331 acres, more or less.
CHAPTER 8--OUTER CONTINENTAL SHELF DEEP WATER ROYALTY RELIEF
SEC. 5421. SHORT TITLE.
This chapter may be referred to as the ``Outer Continental
Shelf Deep Water Royalty Relief Act''.
SEC. 5422. AMENDMENTS TO THE OUTER CONTINENTAL SHELF LANDS ACT.
Section 8(a)(3) of the Outer Continental Shelf Lands Act
(43 U.S.C. 1337(a)(3)), is amended--
(1) by designating the provisions of paragraph (3) as
subparagraph (A) of such paragraph (3); and
(2) by inserting after subparagraph (A), as so
designated, the following:
``(B) In the Western and Central Planning
Areas of the Gulf of Mexico and the portion of
the Eastern Planning Area of the Gulf of Mexico
encompassing whole lease blocks lying west of
87 degrees, 30 minutes West longitude, the
Secretary may, in order to--
``(i) promote development or
increased production on producing or
non-producing leases; or
``(ii) encourage production of
marginal resources on producing or non-
producing leases;
through primary, secondary, or tertiary
recovery means, reduce or eliminate any royalty
or net profit share set forth in the lease(s).
With the lessee's consent, the Secretary may
make other modifications to the royalty or net
profit share terms of the lease in order to
achieve these purposes.
``(C)(i) Notwithstanding the provisions of
this Act other than this subparagraph, with
respect to any lease or unit in existence on
the date of enactment of the Outer Continental
Shelf Deep Water Royalty Relief Act meeting the
requirements of this subparagraph, no royalty
payments shall be due on new production, as
defined in clause (iv) of this subparagraph,
from any lease or unit located in water depths
of 200 meters or greater in the Western and
Central Planning Areas of the Gulf of Mexico,
including that portion of the Eastern Planning
Area of the Gulf of Mexico encompassing whole
lease blocks lying west of 87 degrees, 30
minutes West longitude, until such volume of
production as determined pursuant to clause
(ii) has been produced by the lessee.
``(ii) Upon submission of a complete
application by the lessee, the Secretary shall
determine within 180 days of such application
whether new production from such lease or unit
would be economic in the absence of the relief
from the requirement to pay royalties provided
for by clause (i) of this subparagraph. In
making such determination, the Secretary shall
consider the increased technological and
financial risk of deep water development and
all costs associated with exploring,
developing, and producing from the lease. The
lessee shall provide information required for a
complete application to the Secretary prior to
such determination. The Secretary shall clearly
define the information required for a complete
application under this section. Such
application may be made on the basis of an
individual lease or unit. If the Secretary
determines that such new production would be
economic in the absence of the relief from the
requirement to pay royalties provided for by
clause (i) of this subparagraph, the provisions
of clause (i) shall not apply to such
production. If the Secretary determines that
such new production would not be economic in
the absence of the relief from the requirement
to pay royalties provided for by clause (i),
the Secretary must determine the volume of
production from the lease or unit on which no
royalties would be due in order to make such
new production economically viable; except that
for new production as defined in clause
(iv)(I), in no case will that volume be less
than 17.5 million barrels of oil equivalent in
water depths of 200 to 400 meters, 52.5 million
barrels of oil equivalent in 400 to 800 meters
of water, and 87.5 million barrels of oil
equivalent in water depths greater than 800
meters. Redetermination of the applicability of
clause (i) shall be undertaken by the Secretary
when requested by the lessee prior to the
commencement of the new production and upon
significant change in the factors upon which
the original determination was made. The
Secretary shall make such redetermination
within 120 days of submission of a complete
application. The Secretary may extend the time
period for making any determination or
redetermination under this clause for 30 days,
or longer if agreed to by the applicant, if
circumstances so warrant. The lessee shall be
notified in writing of any determination or
redetermination and the reasons for and
assumptions used for such determination. Any
determination or redetermination under this
clause shall be a final agency action. The
Secretary's determination or redetermination
shall be judicially reviewable under section
10(a) of the Administrative Procedure Act (5
U.S.C. 702), only for actions filed within 30
days of the Secretary's determination or
redetermination.
``(iii) In the event that the Secretary fails
to make the determination or redetermination
called for in clause (ii) upon application by
the lessee within the time period, together
with any extension thereof, provided for by
clause (ii), no royalty payments shall be due
on new production as follows:
``(I) For new production, as defined
in clause (iv)(I) of this subparagraph,
no royalty shall be due on such
production according to the schedule of
minimum volumes specified in clause
(ii) of this subparagraph.
``(II) For new production, as defined
in clause (iv)(II) of this
subparagraph, no royalty shall be due
on such production for one year
following the start of such production.
``(iv) For purposes of this subparagraph, the
term `new production' is--
``(I) any production from a lease
from which no royalties are due on
production, other than test production,
prior to the date of enactment of the
Outer Continental Shelf Deep Water
Royalty Relief Act; or
``(II) any production resulting from
lease development activities pursuant
to a Development Operations
Coordination Document, or supplement
thereto that would expand production
significantly beyond the level
anticipated in the Development
Operations Coordination Document,
approved by the Secretary after the
date of enactment of the Outer
Continental Shelf Deep Water Royalty
Relief Act.
``(v) During the production of volumes
determined pursuant to clauses (ii) or (iii) of
this subparagraph, in any year during which the
arithmetic average of the closing prices on the
New York Mercantile Exchange for light sweet
crude oil exceeds $28.00 per barrel, any
production of oil will be subject to royalties
at the lease stipulated royalty rate. Any
production subject to this clause shall be
counted toward the production volume determined
pursuant to clauses (ii) or (iii). Estimated
royalty payments will be made if such average
of the closing prices for the previous year
exceeds $28.00. After the end of the calendar
year, when the new average price can be
calculated, lessees will pay any royalties due,
with interest but without penalty, or can apply
for a refund, with interest, of any
overpayment.
``(vi) During the production of volumes
determined pursuant to clause (ii) or (iii) of
this subparagraph, in any year during which the
arithmetic average of the closing prices on the
New York Mercantile Exchange for natural gas
exceeds $3.50 per million British thermal
units, any production of natural gas will be
subject to royalties at the lease stipulated
royalty rate. Any production subject to this
clause shall be counted toward the production
volume determined pursuant to clauses (ii) or
(iii). Estimated royalty payments will be made
if such average of the closing prices for the
previous year exceeds $3.50. After the end of
the calendar year, when the new average price
can be calculated, lessees will pay any
royalties due, with interest but without
penalty, or can apply for a refund, with
interest, of any overpayment.
``(vii) The prices referred to in clauses (v)
and (vi) of this subparagraph shall be changed
during any calendar year after 1994 by the
percentage, if any, by which the implicit price
deflator for the gross domestic product changed
during the preceding calendar year.''.
SEC. 5423. NEW LEASES.
Section 8(a)(1) of the Outer Continental Shelf Lands Act,
as amended (43 U.S.C. 1337(a)(1)), is amended--
(1) by redesignating subparagraph (H) as subparagraph
(I);
(2) by striking ``or'' at the end of subparagraph
(G); and
(3) by inserting after subparagraph (G) the following
new subparagraph:
``(H) cash bonus bid with royalty at no less
than 12 and 1/2 per centum fixed by the
Secretary in amount or value of production
saved, removed, or sold, and with suspension of
royalties for a period, volume, or value of
production determined by the Secretary, which
suspensions may vary based on the price of
production from the lease; or''.
SEC. 5424. LEASE SALES.
For all tracts located in water depths of 200 meters or
greater in the Western and Central Planning Area of the Gulf of
Mexico, including that portion of the Eastern Planning Area of
the Gulf of Mexico encompassing whole lease blocks lying west
of 87 degrees, 30 minutes West longitude, any lease sale within
seven years of the date of enactment of this chapter, shall use
the bidding system authorized in section 8(a)(1)(H) of the
Outer Continental Shelf Lands Act, as amended by this chapter,
except that the suspension of royalties shall be set at a
volume of not less than the following:
(1) 17.5 million barrels of oil equivalent for leases
in water depths of 200 to 400 meters;
(2) 52.5 million barrels of oil equivalent for leases
in 400 to 800 meters of water; and
(3) 87.5 million barrels of oil equivalent for leases
in water depths greater than 800 meters.
SEC. 5425. REGULATIONS.
The Secretary shall promulgate such rules and regulations
as are necessary to implement the provisions of this chapter
within 180 days after the enactment of this Act.
SEC. 5426. SAVINGS CLAUSE.
Nothing in this chapter shall be construed to affect any
offshore pre-leasing, leasing, or development moratorium,
including any moratorium applicable to the Eastern Planning
Area of the Gulf of Mexico located off the Gulf Coast of
Florida.
Subtitle C--GSA Property Sales
SEC. 6021. SALE OF GOVERNORS ISLAND, NEW YORK.
(a) In General.--Notwithstanding any other provision of
law, the Administrator of General Services shall dispose of by
sale at fair market value all rights, title, and interests of
the United States in and to the land of, and improvements to,
Governors Island, New York.
(b) Right of First Refusal.--Before a sale is made under
subsection (a) to any other parties, the State of New York and
the city of New York shall be given the right of first refusal
to purchase all or part of Governors Island. Such right may be
exercised by either the State of New York or the city of New
York or by both parties acting jointly.
(c) Proceeds.--Proceeds from the disposal of Governors
Island under subsection (a) shall be deposited in the general
fund of the Treasury and credited as miscellaneous receipts.
SEC. 6022. SALE OF AIR RIGHTS.
(a) In General.--Notwithstanding any other provision of
law, the Administrator of General Services shall sell, at fair
market value and in a manner to be determined by the
Administrator, the air rights adjacent to Washington Union
Station described in subsection (b), including air rights
conveyed to the Administrator under subsection (d). The
Administrator shall complete the sale by such date as is
necessary to ensure that the proceeds from the sale will be
deposited in accordance with subsection (c).
(b) Description.--The air rights referred to in subsection
(a) total approximately 16.5 acres and are depicted on the plat
map of the District of Columbia as follows:
(1) Part of lot 172, square 720.
(2) Part of lots 172 and 823, square 720.
(3) Part of lot 811, square 717.
(c) Proceeds.--Before September 30, 1996, proceeds from the
sale of air rights under subsection (a) shall be deposited in
the general fund of the Treasury and credited as miscellaneous
receipts.
(d) Conveyance of Amtrak Air Rights.--
(1) General rule.--As a condition of future Federal
financial assistance, Amtrak shall convey to the
Administrator of General Services on or before December
31, 1995, at no charge, all of the air rights of Amtrak
described in subsection (b).
(2) Failure to comply.--If Amtrak does not meet the
condition established by paragraph (1), Amtrak shall be
prohibited from obligating Federal funds after March 1,
1996.
TITLE V--ENERGY AND NATURAL RESOURCES PROVISIONS
Subtitle A--Nuclear Regulatory Commission Annual Charges
SEC. 5001. NUCLEAR REGULATORY COMMISSION ANNUAL CHARGES.
Section 6101(a)(3) of the Omnibus Budget Reconciliation Act
of 1990 (42 U.S.C. 2214(a)(3)) is amended by striking
``September 30, 1998'' and inserting ``September 30, 2002''.
Subtitle B--Department of Energy Assets
CHAPTER 1--UNITED STATES ENRICHMENT CORPORATION
SEC. 5410. HETCH HETCHY DAM.
Section 7 of the Act of December 13, 1913 (38 Stat. 242),
is amended--
(1) By striking ``pay the sum of $30,000'' and all
that follows in the first sentence and inserting ``pay
an amount determined annually by the Secretary in
accordance with the formula used by the Federal Energy
Regulatory Commission for application to licenses of
hydroelectric projects under the Federal Power Act (16
U.S.C. 791 et seq.), provided that, in no event shall
such amount be less than $597,000.00. Said amount to be
paid on the first day of July of each year.''.
(2) By amending the second and third sentences to
read as follows: ``These funds shall be placed in a
separate fund by the United States and, notwithstanding
any other provision of law, shall not be available for
obligation or expenditure until appropriated by
Congress. The highest priority use of the funds shall
be for annual operation of Yosemite National Park, with
the remainder of any funds to be used to fund
operations of other national parks in the State of
California.''.
CHAPTER 7--POWER MARKETING ADMINISTRATIONS
Subchapter A--Bonneville Power Administration Refinancing
SEC. 5401. DEFINITIONS.
For the purposes of this subchapter--
(1) ``Administrator'' means the Administrator of the
Bonneville Power Administration;
(2) ``capital investment'' means a capitalized cost
funded by Federal appropriations that--
(A) is for a project, facility, or separable
unit or feature of a project or facility;
(B) is a cost for which the Administrator is
required by law to establish rates to repay to
the United States Treasury through the sale of
electric power, transmission, or other
services;
(C) excludes a Federal irrigation investment;
and
(D) excludes an investment financed by the
current revenues of the Administrator or by
bonds issued and sold, or authorized to be
issued and sold, by the Administrator under
section 13 of the Federal Columbia River
Transmission System Act (16 U.S.C. 838k);
(3) ``new capital investment'' means a capital
investment for a project, facility, or separable unit
or feature of a project, facility, or separable unit or
feature of a project or facility, placed in service
after September 30, 1995;
(4) ``old capital investment'' means a capital
investment the capitalized cost of which--
(A) was incurred, but not repaid, before
October 1, 1995, and
(B) was for a project, facility, or separable
unit or feature of a project or facility,
placed in service before October 1, 1995;
(5) ``repayment date'' means the end of the period
within which the Administrator's rates are to assure
the repayment of the principal amount of a capital
investment; and
(6) ``Treasury rate'' means--
(A) for an old capital investment, a rate
determined by the Secretary of the Treasury,
taking into consideration prevailing market
yields, during the month preceding October 1,
1995, on outstanding interest-bearing
obligations of the United States with periods
to maturity comparable to the period between
October 1, 1995, and the repayment date for the
old capital investment; and
(B) for a new capital investment, a rate
determined by the Secretary of the Treasury,
taking into consideration prevailing market
yields, during the month preceding the
beginning of the fiscal year in which the
related project, facility, or separable unit or
feature is placed in service, on outstanding
interest-bearing obligations of the United
States with periods to maturity comparable to
the period between the beginning of the fiscal
year and the repayment date for the new capital
investment.
SEC. 5402. NEW PRINCIPAL AMOUNTS.
(a) Principal Amount.--Effective October 1, 1995, an old
capital investment has a new principal amount that is the sum
of--
(1) the present value of the old payment amounts for
the old capital investment, calculated using a discount
rate equal to the Treasury rate for the old capital
investment; and
(2) an amount equal to $100,000,000 multiplied by a
fraction the numerator of which is the principal amount
of the old payment amounts for the old capital
investment and the denominator of which is the sum of
the principal amounts of the old payment amounts for
all old capital investments.
(b) Determination.--With the approval of the Secretary of
the Treasury, based solely on consistency with this subchapter,
the Administrator shall determine the new principal amounts
under this section and the assignment of interest rates to the
new principal amounts under section 5403.
(c) Old Payment Amount.--For the purposes of this section,
``old payment amounts'' means, for an old capital investment,
the annual interest and principal that the Administrator would
have paid to the United States Treasury from October 1, 1995,
if this subchapter had not been enacted, assuming that--
(1) the principal were repaid--
(A) on the repayment date the Administrator
assigned before October 1, 1993, to the old
capital investment, or
(B) with respect to an old capital investment
for which the Administrator has not assigned a
repayment date before October 1, 1993, on a
repayment date the Administrator shall assign
to the old capital investment in accordance
with paragraph 10(d)(1) of the version of
Department of Energy Order RA 6120.2 in effect
on October 1, 1993; and
(2) interest were paid--
(A) at the interest rate the Administrator
assigned before October 1, 1993, to the old
capital investment, or
(B) with respect to an old capital investment
for which the Administrator has not assigned an
interest rate before October 1, 1993, at a rate
determined by the Secretary of the Treasury,
taking into consideration prevailing market
yields, during the month preceding the
beginning of the fiscal year in which the
related project, facility, or separable unit or
feature is placed in service, on outstanding
interest-bearing obligations of the United
States with periods to maturity comparable to
the period between the beginning of the fiscal
year and the repayment date for the old capital
investment.
SEC. 5403. INTEREST RATE FOR NEW PRINCIPAL AMOUNTS.
As of October 1, 1995, the unpaid balance on the new
principal amount established for an old capital investment
under section 5402 bears interest annually at the Treasury rate
for the old capital investment until the earlier of the date
that the new principal amount is repaid or the repayment date
for the new principal amount.
SEC. 5404. REPAYMENT DATES.
As of October 1, 1995, the repayment date for the new
principal amount established for an old capital investment
under section 5402 is no earlier than the repayment date for
the old capital investment assumed in section 5402(c)(1).
SEC. 5405. PREPAYMENT LIMITATIONS.
During the period October 1, 1995, through September 30,
2000, the total new principal amounts of old capital
investments, as established under section 5402, that the
Administrator may pay before their respective repayment dates
shall not exceed $100,000,000.
SEC. 5406. INTEREST RATES FOR NEW CAPITAL INVESTMENTS DURING
CONSTRUCTION.
(a) New Capital Investment.--The principal amount of a new
capital investment includes interest in each fiscal year of
construction of the related project, facility, or separable
unit or feature at a rate equal to the one-year rate for the
fiscal year on the sum of--
(1) construction expenditures that were made from the
date construction commenced through the end of the
fiscal year, and
(2) accrued interest during construction.
(b) Payment.--The Administrator is not required to pay,
during construction of the project, facility, or separable unit
or feature, the interest calculated, accrued, and capitalized
under subsection (a).
(c) One-Year Rate.--For the purposes of this section,
``one-year rate'' for a fiscal year means a rate determined by
the Secretary of the Treasury, taking into consideration
prevailing market yields, during the month preceding the
beginning of the fiscal year, on outstanding interest-bearing
obligations of the United States with periods to maturity of
approximately one year.
SEC. 5407. INTEREST RATES FOR NEW CAPITAL INVESTMENTS.
The unpaid balance on the principal amount of a new capital
investment bears interest at the Treasury rate for the new
capital investment from the date the related project, facility,
or separable unit or feature is placed in service until the
earlier of the date the new capital investment is repaid or the
repayment date for the new capital investment.
SEC. 5408. CREDITS TO ADMINISTRATOR'S PAYMENTS TO THE UNITED STATES
TREASURY.
The Confederated Tribe of the Colville Reservation Grand
Coulee Dam Settlement Act (Public Law 103-436; 108 Stat. 4577)
is amended by striking section 6 and inserting the following:
``SEC. 6. CREDITS TO ADMINISTRATOR'S PAYMENTS TO THE UNITED STATES
TREASURY.
``So long as the Administrator makes annual payments to the
tribes under the settlement agreement, the Administrator shall
apply against amounts otherwise payable by the Administrator to
the United States Treasury a credit that reduces the
Administrator's payment in the amount and for each fiscal year
as follows: $15,250,000 in fiscal year 1996; $15,860,000 in
fiscal year 1997; $16,490,000 in fiscal year 1998; $17,150,000
in fiscal year 1999; $17,840,000 in fiscal year 2000; and
$4,100,000 in each succeeding fiscal year.''.
SEC. 5409. CONTRACT PROVISIONS.
In each contract of the Administrator that provides for the
Administrator to sell electric power, transmission, or related
services, and that is in effect after September 30, 1995, the
Administrator shall offer to include, or as the case may be,
shall offer to amend to include, provisions specifying that
after September 30, 1995--
(1) the Administrator shall establish rates and
charges on the basis that--
(A) the principal amount of an old capital
investment shall be no greater than the new
principal amount established under section
5402;
(B) the interest rate applicable to the
unpaid balance of the new principal amount of
an old capital investment shall be no greater
than the interest rate established under
section 5403;
(C) any payment of principal of an old
capital investment shall reduce the outstanding
principal balance of the old capital investment
in the amount of the payment at the time the
payment is tendered; and
(D) any payment of interest on the unpaid
balance of the new principal amount of an old
capital investment shall be a credit against
the appropriate interest account in the amount
of the payment at the time the payment is
tendered;
(2) apart from charges necessary to repay the new
principal amount of an old capital investment as
established under section 5402 and to pay the interest
on the principal amount under section 5403, no amount
may be charged for return to the United States Treasury
as repayment for or return on an old capital
investment, whether by way of rate, rent, lease
payment, assessment, user charge, or any other fee;
(3) amounts provided under section 1304 of title 31,
United States Code, shall be available to pay, and
shall be the sole source for payment of, a judgment
against or settlement by the Administrator or the
United States on a claim for a breach of the contract
provisions required by this subchapter; and
(4) the contract provisions specified in this
subchapter do not--
(A) preclude the Administrator from
recovering, through rates or other means, any
tax that is generally imposed on electric
utilities in the United States, or
(B) affect the Administrator's authority
under applicable law, including section 7(g) of
the Pacific Northwest Electric Power Planning
and Conservation Act (16 U.S.C. 839e(g)), to--
(i) allocate costs and benefits,
including but not limited to fish and
wildlife costs, to rates or resources,
or
(ii) design rates.
SEC. 5410. SAVINGS PROVISIONS.
(a) Repayment.--This subchapter does not affect the
obligation of the Administrator to repay the principal
associated with each capital investment, and to pay interest on
the principal, only from the ``Administrator's net proceeds,''
as defined in section 13(b) of the Federal Columbia River
Transmission System Act (16 U.S.C. 838k(b)).
(b) Payment of Capital Investment.--Except as provided in
section 5405, this subchapter does not affect the authority of
the Administrator to pay all or a portion of the principal
amount associated with a capital investment before the
repayment date for the principal amount.
Subchapter B--Alaska Power Marketing Administration Sale
SEC. 5411. SHORT TITLE.
This subchapter may be cited as the ``Alaska Power
Administration Asset Sale and Termination Act''.
SEC. 5412. DEFINITIONS.
For purposes of this subchapter:
(1) The term ``Eklutna'' means Eklutna Hydroelectric
Project and related assets as described in section 4
and Exhibit A of the Eklutna Purchase Agreement.
(2) The term ``Eklutna Purchase Agreement'' means the
August 2, 1989, Eklutna Purchase Agreement between the
Alaska Power Administration of the Department of Energy
and the Eklutna Purchasers, together with any
amendments thereto adopted before the date of enactment
of this Act.
(3) The term ``Eklutna Purchasers'' means the
Municipality of Anchorage doing business as Municipal
Light and Power, the Chugach Electric Association, Inc.
and the Matanuska Electric Association, Inc.
(4) The term ``Snettisham'' means the Snettisham
Hydroelectric Project and related assets as described
in section 4 and Exhibit A of the Snettisham Purchase
Agreement.
(5) The term ``Snettisham Purchase Agreement'' means
the February 10, 1989, Snettisham Purchase Agreement
between the Alaska Power Administration of the
Department of Energy and the Alaska Power Authority and
its successors in interest, together with any
amendments thereto adopted before the date of enactment
of this Act.
(6) The term ``Snettisham Purchaser'' means the
Alaska Industrial Development and Export Authority or a
successor State agency or authority.
SEC. 5413. SALE OF EKLUTNA AND SNETTISHAM HYDROELECTRIC PROJECTS.
CHAPTER 11--PARK ENTRANCE FEES
SEC. 5451. FEES.
(a) Admission Fees.--Section 4(a) of the Land and Water
Conservation Fund Act of 1965 (16 U.S.C. 460l-6a(a)) is
amended--
(1) in the first sentence of the subsection by
striking ``no more than 21'';
(2) in the first sentence of paragraph (1)(A)(i) by
striking ``$25'' and inserting ``$50'';
(3) in the second sentence of paragraph (1)(B) by
striking ``$15'' and inserting ``$25'';
(4) in paragraph (2) by striking the fourth, fifth,
and sixth sentences and inserting ``The fee for a
single-visit permit at any designated area shall be
collected on a per person basis, not to exceed $6 per
person, including for persons entering by private,
noncommercial vehicle.'';
(5) in paragraph (3)--
(A) in the third sentence by inserting
``Great'' before ``Smoky''; and
(B) by striking the last sentence;
(6) in paragraph (4)--
(A) by striking the second sentence and
inserting ``Such permit shall be
nontransferable, shall be issued for a one-time
charge, which shall be set at the same rate as
the fee for a Golden Eagle Passport, and shall
entitle the permittee to free admission into
any area designated pursuant to this
subsection.''; and
(B) by striking the third sentence and
inserting ``No fees of any kind shall be
collected from any persons who have a right of
access for hunting or fishing privileges under
a specific provision of law or treaty or who
are engaged in the conduct of official Federal,
State, or local government business.'';
(7) by striking paragraph (5) and inserting the
following:
``(5) The Secretary of the Interior and the Secretary
of Agriculture shall establish procedures providing for
the issuance of a lifetime admission permit to any
citizen of, or person legally domiciled in, the United
States, if such citizen or person applies for such
permit and is permanently disabled. Such procedures
shall ensure that a lifetime admission permit shall be
issued only to persons who have been medically
determined to be permanently disabled. A lifetime
admission permit shall be nontransferable, shall be
issued without charge, and shall entitle the permittee
and one accompanying individual to general admission
into any area designated pursuant to this subsection,
notwithstanding the method of travel.'';
(8) by striking paragraph (9) and by redesignating
paragraph (10) as paragraph (9)'';
(9) by striking all but the last sentence of
paragraph (11) and redesignating paragraph (11) as
paragraph (10); and
(10) by redesignating paragraph (12) as paragraph
(11).
(b) Recreation Fees.--Section 4 of the Land and Water
Conservation Fund Act of 1965 (16 U.S.C. 460l-6a) is amended by
striking subsection (b) and inserting the following:
``(b) Recreation Use Fees.--Each agency developing,
administering, providing, or furnishing at Federal expense
services for such activities as camping, including, but not
limited to, back country camping under permit, guarded swimming
sites, boat launch facilities, managed parking lots, motorized
recreation use and other recreation uses, is authorized, in
accordance with this section to provide for the collection of
recreation use fees at the place of use or any reasonably
convenient location. The administering Secretary may establish
both daily and annual recreation use fees.''.
(c) Criteria, Posting and Uniformity of Fees.--Section 4(d)
of the Land and Water Conservation Fund Act of 1965 (16 U.S.C.
460l-6a(d)) is amended in the first sentence by striking
``recreation fees charged by non-Federal public agencies,'' and
inserting ``fees charged by other public and private
entities,''.
(d) Penalty.--Section 4(e) of the Land and Water
Conservation Fund Act of 1965 (16 U.S.C. 460l-6a(e)) is amended
by striking ``of not more than $100.'' and inserting ``as
provided by law.''.
(e) Technical Amendments.--Section 4(h) of the Land and
Water Conservation Fund Act of 1965 (16 U.S.C. 460l-6a(h)) is
amended--
(1) by striking ``Bureau of Outdoor Recreation'' and
inserting ``National Park Service'';
(2) by striking ``Natural Resources'' and inserting
``Resources''; and
(3) by striking ``Bureau'' and inserting ``National
Park Service''.
(f) Use of Fees.--Section 4(i) of the Land and Water
Conservation Fund Act of 1965 (16 U.S.C. 460l-6a(i)) is
amended--
(1) in the first sentence of paragraph (1)(B) by
striking ``fee collection costs for that fiscal year''
and inserting ``fee collection costs for the
immediately preceding fiscal year'' and by striking
``section in that fiscal year'' and inserting ``section
in such immediately preceding fiscal year'';
(2) in the second sentence of subparagraph (B) by
striking ``in that fiscal year''; and
(3) by striking paragraph (4) and inserting the
following:
``(4) Amounts covered into the special account for
the National Park Service shall be allocated among park
system units in accordance with subsection (j) for
obligation or expenditure by the Director of the
National Park Service for park operations.''.
(g) Time of Reimbursement.--Section 4(k) of the Land and
Water Conservation Fund Act of 1965 (16 U.S.C. 460l-6a(k)) is
amended by striking the last sentence.
(h) Commercial Tour Use Fees.--Section 4(n) of the Land and
Water Conservation Fund Act of 1965 (16 U.S.C. 460l-6a(n)) is
amended--
(1) by striking the first sentence of paragraph (1)
and inserting ``In the case of each unit of the
National Park System for which an admission fee is
charged under this section, the Secretary of the
Interior shall establish, by October 1, 1996, a
commercial tour use fee in lieu of a per person
admission fee to be imposed on each vehicle entering
the unit for the purpose of providing commercial tour
services within the unit.''; and
(2) by striking the period at the end of paragraph
(3) and inserting ``, with written notification of such
adjustments provided to commercial tour operators 12
months in advance of implementation.''.
(i) Conforming Amendments.--
(1) Title I of the Department of the Interior and
Related Agencies Appropriations Act, 1994, is amended
by striking the second proviso under the heading
``Administrative Provisions'' under the heading
``National Park Service'' (related to recovery of costs
associated with special use permits).
(2) Section 3 of the Act entitled ``An Act creating
the Mount Rushmore National Memorial Commission and
defining its purposes and powers'', approved February
25, 1929 (45 Stat. 1300, chapter 315), is amended by
striking the last sentence.
(3) Section 5 of Public Law 87-657 (16 U.S.C. 459c-
5), is amended by striking subsection (e).
(4) Section 3 of Public Law 87-750 (16 U.S.C. 398e)
is amended by striking subsection (b).
(5) Section 4(e) of Public Law 92-589 (16 U.S.C.
460bb-3) is amended by striking the first sentence.
(6) Section 6 of Public Law 95-348 (16 U.S.C. 410dd)
is amended by striking subsection (j).
(7) Section 207 of Public Law 96-199 (16 U.S.C.
410ff-6) is repealed.
(8) Section 106 of Public Law 96-287 (16 U.S.C.
410gg-5) is amended by striking the last sentence.
(9) Section 204 of Public Law 96-287 (94 Stat. 601)
is amended by striking the last sentence.
(10) Section 5 of Public Law 96-428 (94 Stat. 1842;
16 U.S.C. 461 note) is repealed.
(11) Public Law 100-55 (101 Stat. 371; U.S.C. 460l-6a
note) is repealed.
SEC. 5452. COVERING OF INCREASED FEE REVENUES INTO SPECIAL ACCOUNTS.
Of the funds deposited in special accounts in the Treasury
for the National Park Service, Bureau of Land Management, and
Forest Service as set forth in section 4(i) of the Land and
Water Conservation Fund Act of 1965 (16 U.S.C. 460l-6a(i)),
beginning in fiscal year 1997, 80 percent of all receipts
earned in the previous year in excess of the following amounts
for each covered agency shall be made available to that agency
without further appropriation:
(1) National Park System:
(A) $82,000,000 for fiscal year 1997.
(B) $85,000,000 for fiscal year 1998.
(C) $88,000,000 for fiscal year 1999.
(D) $91,000,000 for fiscal year 2000.
(E) $94,000,000 for fiscal year 2001.
(F) $97,000,000 for fiscal year 2002.
(G) $100,000,000 for fiscal year 2003.
(2) Bureau of Land Management:
(A) $4,500,000 for fiscal year 1997.
(B) $5,000,000 for fiscal year 1998.
(C) $5,000,000 for fiscal year 1999.
(D) $5,000,000 for fiscal year 2000.
(E) $5,000,000 for fiscal year 2001.
(F) $5,000,000 for fiscal year 2002.
(G) $5,000,000 for fiscal year 2003.
(3) Forest Service:
(A) $20,000,000 for fiscal year 1997.
(B) $20,600,000 for fiscal year 1998.
(C) $21,200,000 for fiscal year 1999.
(D) $21,900,000 for fiscal year 2000.
(E) $22,500,000 for fiscal year 2001.
(F) $23,600,000 for fiscal year 2002.
(G) $24,300,000 for fiscal year 2003.
SEC. 5453. ALLOCATION AND USE OF FEES.
(a) Allocation.--Beginning in fiscal year 1997, receipts
above the amounts stated in section 5454 in each covered
agency's special account from the previous fiscal year shall be
allocated as follows:
(1) Seventy-five percent shall be allocated among the
units or areas of each affected agency in the same
proportion as fees collected pursuant to section 4 of
the Land and Water Conservation Fund Act of 1965 (16
U.S.C. 460l-6a) from a specific unit or area bear to
the total amount of such fees collected from all units
or areas of the same covered agency for each fiscal
year.
(2) Twenty-five percent shall be allocated among each
covered agency's units or areas on the basis of need,
as determined by the Secretary.
(b) Use.--Expenditures from the special accounts shall be
used solely for infrastructure related to visitor use and
annual operating expenses related to visitor services at units
or areas of the covered agencies.
Subtitle F--National Defense Stockpile
SEC. 12601. DISPOSAL OF CERTAIN MATERIALS IN NATIONAL DE- FENSE
STOCKPILE FOR DEFICIT REDUCTION.
(a) Disposals Required.--(1) During fiscal year 1996, the
President shall dispose of all cobalt contained in the National
Defense Stockpile that, as of the date of the enactment of this
Act, is authorized for disposal under any law (other than this
Act).
(2) In addition to the disposal of cobalt under paragraph
(1), the President shall dispose of additional quantities of
cobalt and quantities of other materials contained in the
National Defense Stockpile and specified in the table in
subsection (b) so as to result in receipts to the United States
in amounts equal to--
(A) $21,000,000 during the fiscal year ending
September 30, 1996;
(B) $338,000,000 during the five-fiscal year period
ending on September 30, 2000; and
(C) $649,000,000 during the seven-fiscal year period
ending on September 30, 2002.
(b) Limitation on Disposal Quantity.--The total quantities
of materials authorized for disposal by the President under
subsection (a)(2) may not exceed the amounts set forth in the
following table:
AUTHORIZED STOCKPILE DISPOSALS
------------------------------------------------------------------------
Material for disposal Quantity
------------------------------------------------------------------------
Aluminum................................. 62,881 short tons.
Cobalt................................... 30,000,000 pounds contained.
Columbium Ferro.......................... 930,911 pounds contained.
Germanium Metal.......................... 40,000 kilograms.
Indium................................... 35,000 troy ounces.
Palladium................................ 15,000 troy ounces.
Platinum................................. 10,000 troy ounces.
Rubber, Natural.......................... 125,138 long tons.
Tantalum, Carbide Powder................. 6,000 pounds contained.
Tantalum, Minerals....................... 750,000 pounds contained.
Tantalum, Oxide.......................... 40,000 pounds contained.
------------------------------------------------------------------------
(c) Deposit of Receipts.--Notwithstanding section 9 of the
Strategic and Critical Materials Stock Piling Act (50 U.S.C.
98h), funds received as a result of the disposal of materials
under subsection (a)(2) shall be deposited into the general
fund of the Treasury for the purpose of deficit reduction.
(d) Relationship to Other Disposal Authority.--The disposal
authority provided in subsection (a)(2) is new disposal
authority and is in addition to, and shall not affect, any
other disposal authority provided by law regarding the
materials specified in such subsection.
(e) Termination of Disposal Authority.--The President may
not use the disposal authority provided in subsection (a)(2)
after the date on which the total amount of receipts specified
in subparagraph (C) of such subsection is achieved.
(f) Definition.--The term ``National Defense Stockpile''
means the National Defense Stockpile provided for in section 4
of the Strategic and Critical Materials Stock Piling Act (50
U.S.C. 98c).
SEC. 9002. EXTENSION OF HIGHER VESSEL TONNAGE DUTIES.
(a) Extension of Duties.--Section 36 of the Act of August
5, 1909 (36 Stat. 111; 46 U.S.C. App. 121), is amended by
striking ``for fiscal years 1991, 1992, 1993, 1994, 1995, 1996,
1997, 1998,'' each place it appears and inserting ``for fiscal
years through fiscal year 2002,''.
(b) Conforming Amendment.--The Act entitled ``An Act
concerning tonnage duties on vessels entering otherwise than
the sea'', approved March 8, 1910 (36 Stat. 234; 46 U.S.C. App.
132), is amended by striking ``for fiscal years 1991, 1992,
1993, 1994, 1995, 1996, 1997, and 1998,'' and inserting
``fiscal years through fiscal year 2002,''.
SEC. 9003. FEMA RADIOLOGICAL EMERGENCY PREPAREDNESS FEES.
(a) In General.--The Director of the Federal Emergency
Management Agency may assess and collect fees applicable to
persons subject to radiological emergency preparedness
regulations issued by the Director.
(b) Requirements.--The assessment and collection of fees by
the Director under subsection (a) shall be fair and equitable
and shall reflect the full amount of costs to the Agency of
providing radiological emergency planning, preparedness,
response, and associated services. Such fees shall be assessed
by the Director in a manner that reflects the use of resources
of the Agency for classes of regulated persons and the and the
administrative costs of collecting such fees.
(c) Amount of Fees.--The aggregate amount of fees assessed
under subsection (a) in a fiscal year shall approximate but not
be less than, 100 percent of the amounts anticipated by the
Director to be obligated for the radiological emergency
preparedness program of the Agency for such fiscal year.
(d) Deposit of Fees in Treasury.--Fees received pursuant to
subsection (a) shall be deposited in the general fund of the
Treasury as offsetting receipts.
(e) Expiration of Authority.--The authority of the Director
to assess and collect fees under subsection (a) shall expire on
September 30, 2002.
SEC. 6011. PATENT AND TRADEMARK FEES.
Section 10101 of the Omnibus Budget Reconciliation Act of
1990 (35 U.S.C. 41 note) is amended--
(1) in subsection (a) by striking ``1998'' and
inserting ``2002'';
(2) in subsection (b)(2) by striking ``1998'' and
inserting ``2002''; and
(3) in subsection (c)--
(A) by striking ``through 1998'' and
inserting ``through 2002''; and
(B) by adding at the end the following:
``(9) $119,000,000 in fiscal year 1999.
``(10) $119,000,000 in fiscal year 2000.
``(11) $119,000,000 in fiscal year 2001.
``(12) $119,000,000 in fiscal year 2002.''.
CHAPTER 6--DISCLOSURE OF RETURN INFORMATION FOR ADMINISTRATION OF
CERTAIN VETERANS PROGRAMS
SEC. 11161. DISCLOSURE OF RETURN INFORMATION FOR ADMINISTRATION OF
CERTAIN VETERANS PROGRAMS.
(a) General Rule.--Subparagraph (D) of section 6103(l)(7)
(relating to disclosure of return information to Federal,
State, and local agencies administering certain programs) is
amended by striking ``Clause (viii) shall not apply after
September 30, 1998.'' and inserting ``Clause (viii) shall not
apply after September 30, 2002.''
(b) Effective Date.--The amendment made by section (a)
shall take effect on the date of the enactment of this Act.
Subtitle F--Taxpayer Bill of Rights 2 Provisions
SEC. 11201. EXPANSION OF AUTHORITY TO ABATE INTEREST.
(a) General Rule.--Paragraph (1) of section 6404(e)
(relating to abatement of interest in certain cases) is
amended--
(1) by inserting ``unreasonable'' before ``error''
each place it appears in subparagraphs (A) and (B), and
(2) by striking ``in performing a ministerial act''
each place it appears and inserting ``in performing a
ministerial or managerial act''.
(b) Clerical Amendment.--The subsection heading for
subsection (e) of section 6404 is amended--
(1) by striking ``Assessment'' and inserting
``Abatement'', and
(2) by inserting ``Unreasonable'' before ``Errors''.
(c) Effective Date.--The amendments made by this section
shall apply to interest accruing with respect to deficiencies
or payments for taxable years beginning after the date of the
enactment of this Act.
SEC. 11202. EXTENSION OF INTEREST-FREE PERIOD FOR PAYMENT OF TAX
AFTER NOTICE AND DEMAND.
(a) General Rule.--Paragraph (3) of section 6601(e)
(relating to payments made within 10 days after notice and
demand) is amended to read as follows:
SEC 6105. DENIAL OF UNEMPLOYMENT INSURANCE TO INDIVIDUALS WHO
VOLUNTARILY LEAVE MILITARY SERVICE.
(a) General Rule.--Paragraph (1) of section 8521(a) of
title 5, United State Code, is amended to read as follows:
``(1) `Federal service' means active service (not
including active duty in a reserve status unless for a
continuous period of 45 days or more) in the armed
forces or the commissioned corps of the National
Oceanic and Atmospheric Administration if with respect
to that service the individual--
``(A) was discharged or released under
honorable conditions,
``(B) did not resign or voluntarily leave the
service, and
``(C) was not discharged or released for
cause as defined by the Secretary of
Defense;''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply in the case of a discharge or release after the
date of the enactment of this Act.
TITLE IX--LIMITATIONS ON CORPORATE WELFARE AND OTHER REVENUE PROVISIONS
SEC. ____001. AMENDMENT OF 1986 CODE.
Except as otherwise expressly provided, whenever in this
title an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a section or other provision, the
reference shall be considered to be made to such section or
other provision of the Internal Revenue Code of 1986.
SEC. ____002. TABLE OF CONTENTS.
The table of contents for this title is as follows:
TITLE ____--LIMITATIONS ON CORPORATE WELFARE AND OTHER REVENUE
PROVISIONS
Sec. ____001. Amendment of 1986 Code.
Sec. ____002. Table of contents.
Subtitle A--Expatriation
Sec. ____101. Revision of tax rules on expatriation.
Sec. ____102. Information on individuals expatriating.
Subtitle B--Corporate Reforms
Sec. ____201. Tax treatment of certain extraordinary dividends.
Sec. ____202. Registration of confidential corporate tax shelters.
Sec. ____203. Denial of deduction for interest on loans with respect to
company-owned insurance.
Sec. ____204. Termination of suspense accounts for family corporations
required to use accrual method of accounting.
Sec. ____205. Modifications of Puerto Rico and possessions tax credit.
Sec. ____206. Personal property used predominantly in the United States
treated as not property of a like kind with respect to
property used predominantly outside the United States.
Sec. ____207. Repeal of financial institution transition rule to
interest allocation rules.
Sec. ____208. Conversion of large corporations into S corporations
treated as complete liquidation.
Sec. ____209. Modification of taxable years to which net operating
losses may be carried.
Sec. ____210. Constructive sales treatment for appreciated financial
positions.
Sec. ____211. Modification of rules for allocating interest expense to
tax-exempt interest.
Sec. ____212. Reduction of 70 percent dividends received deduction to 50
percent.
Sec. ____213. Modification of holding period applicable to dividends
received deduction.
Sec. ____214. Certain preferred stock treated as boot.
Sec. ____215. Denial of interest deductions on certain debt instruments.
Sec. ____216. Deferral of deduction for interest on convertible debt
until payment.
Subtitle C--Foreign Provisions
Part I--Foreign Trusts
Sec. ____301. Improved information reporting on foreign trusts.
Sec. ____302. Modifications of rules relating to foreign trusts having
one or more United States beneficiaries.
Sec. ____303. Foreign persons not to be treated as owners under grantor
trust rules.
Sec. ____304. Information reporting regarding foreign gifts.
Sec. ____305. Modification of rules relating to foreign trusts which are
not grantor trusts.
Sec. ____306. Residence of estates and trusts, etc.
Part II--Other Foreign Provisions
Sec. ____311. Definition of foreign personal holding company income.
Sec. ____312. Treatment of foreign oil and gas extraction income.
Sec. ____313. Limitation on exclusion of earned income of citizens or
residents of the United States living abroad.
Subtitle D--Accounting Provisions
Sec. ____401. Repeal of bad debt reserve method for thrift savings
associations.
Sec. ____402. Depreciation under income forecast method.
Sec. ____403. Repeal of lower-of-cost-or-market method of accounting for
inventories.
Subtitle E--Administrative Provisions
Sec. ____501. Repeal of diesel fuel tax rebate to purchasers of diesel-
powered automobiles and light trucks.
Sec. ____502. Increased information reporting penalties.
Subtitle F--Casualty and Involuntary Conversion Provisions
Sec. ____601. Basis adjustment to property held by corporation where
stock in corporation is replacement property under involuntary
conversion rules.
Subtitle G--Excise Tax on Amounts of Private Excess Benefits
Sec. ____701. Excise taxes for failure by certain charitable
organizations to meet certain qualification requirements.
Sec. ____702. Reporting of certain excise taxes and other information.
Sec. ____703. Increase in penalties on exempt organizations for failure
to file complete and timely annual returns.
Subtitle H--Extension of Certain Taxes
Sec. ____801. Extension of hazardous substance Superfund taxes.
Sec. ____802. Extension of oil spill liability tax.
Sec. ____803. Extension of Federal unemployment tax.
Subtitle I--Provisions Relating To Individuals
Sec. ____851. No rollover or exclusion of gain on sale of principal
residence which is attributable to depreciation deductions.
Sec. ____852. Extension of withholding to certain gambling winnings.
Sec. ____853. Repeal of special rule for rental use of vacation homes,
etc., for less than 15 days.
Subtitle J--Reform of Earned Income Credit
Sec. ____901. Earned income credit denied to individuals not authorized
to be employed in the United States.
Sec. ____902. Rules relating to denial of earned income credit on basis
of disqualified income.
Subtitle A--Expatriation
SEC. ____101. REVISION OF TAX RULES ON EXPATRIATION.
(a) In General.--Subpart A of part II of subchapter N of
chapter 1 is amended by inserting after section 877 the
following new section:
``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.
``(a) General Rules.--For purposes of this subtitle--
``(1) Mark to market.--Except as provided in
subsection (f), all property of a covered expatriate to
which this section applies shall be treated as sold on
the expatriation date for its fair market value.
``(2) Recognition of gain or loss.--In the case of
any sale under paragraph (1)--
``(A) notwithstanding any other provision of
this title, any gain arising from such sale
shall be taken into account for the taxable
year of the sale unless such gain is excluded
from gross income under part III of subchapter
B, and
``(B) any loss arising from such sale shall
be taken into account for the taxable year of
the sale to the extent otherwise provided by
this title, except that section 1091 shall not
apply (and section 1092 shall apply) to any
such loss.
``(3) Exclusion for certain gain.--The amount which
would (but for this paragraph) be includible in the
gross income of any individual by reason of this
section shall be reduced (but not below zero) by
$600,000. For purposes of this paragraph, allocable
expatriation gain taken into account under subsection
(f)(2) shall be treated in the same manner as an amount
required to be includible in gross income.
``(4) Election to continue to be taxed as united
states citizen.--
``(A) In general.--If an expatriate elects
the application of this paragraph--
``(i) this section (other than this
paragraph) shall not apply to the
expatriate, but
``(ii) the expatriate shall be
subject to tax under this title, with
respect to property to which this
section would apply but for such
election, in the same manner as if the
individual were a United States
citizen.
``(B) Limitation on amount of estate, gift,
and generation-skipping transfer taxes.--The
aggregate amount of taxes imposed under
subtitle B with respect to any transfer of
property by reason of an election under
subparagraph (A) shall not exceed the amount of
income tax which would be due if the property
were sold for its fair market value immediately
before the time of the transfer or death
(taking into account the rules of paragraph
(2)).
``(C) Requirements.--Subparagraph (A) shall
not apply to an individual unless the
individual--
``(i) provides security for payment
of tax in such form and manner, and in
such amount, as the Secretary may
require,
``(ii) consents to the waiver of any
right of the individual under any
treaty of the United States which would
preclude assessment or collection of
any tax which may be imposed by reason
of this paragraph, and
``(iii) complies with such other
requirements as the Secretary may
prescribe.
``(D) Election.--An election under
subparagraph (A) shall apply to all property to
which this section would apply but for the
election and, once made, shall be irrevocable.
Such election shall also apply to property the
basis of which is determined in whole or in
part by reference to the property with respect
to which the election was made.
``(b) Election To Defer Tax.--
``(1) In general.--If the taxpayer elects the
application of this subsection with respect to any
property--
``(A) no amount shall be required to be
included in gross income under subsection
(a)(1) with respect to the gain from such
property for the taxable year of the sale, but
``(B) the taxpayer's tax for the taxable year
in which such property is disposed of shall be
increased by the deferred tax amount with
respect to the property.
Except to the extent provided in regulations,
subparagraph (B) shall apply to a disposition whether
or not gain or loss is recognized in whole or in part
on the disposition.
``(2) Deferred tax amount.--
``(A) In general.--For purposes of paragraph
(1), the term `deferred tax amount' means, with
respect to any property, an amount equal to the
sum of--
``(i) the difference between the
amount of tax paid for the taxable year
described in paragraph (1)(A) and the
amount which would have been paid for
such taxable year if the election under
paragraph (1) had not applied to such
property, plus
``(ii) an amount of interest on the
amount described in clause (i)
determined for the period--
``(I) beginning on the 91st
day after the expatriation
date, and
``(II) ending on the due date
for the taxable year described
in paragraph (1)(B),
by using the rates and method
applicable under section 6621 for
underpayments of tax for such period.
For purposes of clause (ii), the due date is
the date prescribed by law (determined without
regard to extension) for filing the return of
the tax imposed by this chapter for the taxable
year.
``(B) Allocation of losses.--For purposes of
subparagraph (A), any losses described in
subsection (a)(2)(B) shall be allocated ratably
among the gains described in subsection
(a)(2)(A).
``(3) Security.--
``(A) In general.--No election may be made
under paragraph (1) with respect to any
property unless adequate security is provided
with respect to such property.
``(B) Adequate security.--For purposes of
subparagraph (A), security with respect to any
property shall be treated as adequate security
if--
``(i) it is a bond in an amount equal
to the deferred tax amount under
paragraph (2)(A) for the property, or
``(ii) the taxpayer otherwise
establishes to the satisfaction of the
Secretary that the security is
adequate.
``(4) Waiver of certain rights.--No election may be
made under paragraph (1) unless the taxpayer consents
to the waiver of any right under any treaty of the
United States which would preclude assessment or
collection of any tax imposed by reason of this
section.
``(5) Dispositions.--For purposes of this subsection,
a taxpayer making an election under this subsection
with respect to any property shall be treated as having
disposed of such property--
``(A) immediately before death if such
property is held at such time, and
``(B) at any time the security provided with
respect to the property fails to meet the
requirements of paragraph (3) and the taxpayer
does not correct such failure within the time
specified by the Secretary.
``(6) Elections.--An election under paragraph (1)
shall only apply to property described in the election
and, once made, is irrevocable. An election may be
under paragraph (1) with respect to an interest in a
trust with respect to which gain is required to be
recognized under subsection (f)(1).
``(c) Covered Expatriate.--For purposes of this section--
``(1) In general.--The term `covered expatriate'
means an expatriate--
``(A) whose average annual net income tax (as
defined in section 38(c)(1)) for the period of
5 taxable years ending before the expatriation
date is greater than $100,000, or
``(B) whose net worth as of such date is
$500,000 or more.
If the expatriation date is after 1996, such $100,000
and $500,000 amounts shall be increased by an amount
equal to such dollar amount multiplied by the cost-of-
living adjustment determined under section 1(f)(3) for
such calendar year by substituting `1995' for `1992' in
subparagraph (B) thereof. Any increase under the
preceding sentence shall be rounded to the nearest
multiple of $1,000.
``(2) Exceptions.--An individual shall not be treated
as a covered expatriate if--
``(A) the individual--
``(i) became at birth a citizen of
the United States and a citizen of
another country and, as of the
expatriation date, continues to be a
citizen of, and is taxed as a resident
of, such other country, and
``(ii) has been a resident of the
United States (as defined in section
7701(b)(1)(A)(ii)) for not more than 8
taxable years during the 15-taxable
year period ending with the taxable
year during which the expatriation date
occurs, or
``(B)(i) the individual's relinquishment of
United States citizenship occurs before such
individual attains age 18\1/2\, and
``(ii) the individual has been a resident of
the United States (as so defined) for not more
than 5 taxable years before the date of
relinquishment.
``(d) Property to Which Section Applies.--For purposes of
this section--
``(1) In general.--Except as otherwise provided by
the Secretary, this section shall apply to--
``(A) any interest in property held by a
covered expatriate on the expatriation date the
gain from which would be includible in the
gross income of the expatriate if such interest
had been sold for its fair market value on such
date in a transaction in which gain is
recognized in whole or in part, and
``(B) any other interest in a trust to which
subsection (f) applies.
``(2) Exceptions.--This section shall not apply to
the following property:
``(A) United states real property
interests.--Any United States real property
interest (as defined in section 897(c)(1)),
other than stock of a United States real
property holding corporation which does not, on
the expatriation date, meet the requirements of
section 897(c)(2).
``(B) Interest in certain retirement plans.--
``(i) In general.--Any interest in a
qualified retirement plan (as defined
in section 4974(c)), other than any
interest attributable to contributions
which are in excess of any limitation
or which violate any condition for tax-
favored treatment.
``(ii) Foreign pension plans.--
``(I) In general.--Under
regulations prescribed by the
Secretary, interests in foreign
pension plans or similar
retirement arrangements or
programs.
``(II) Limitation.--The value
of property which is treated as
not sold by reason of this
subparagraph shall not exceed
$500,000.
``(e) Definitions.--For purposes of this section--
``(1) Expatriate.--The term `expatriate' means--
``(A) any United States citizen who
relinquishes his citizenship, or
``(B) any long-term resident of the United
States who--
``(i) ceases to be a lawful permanent
resident of the United States (within
the meaning of section 7701(b)(6)), or
``(ii) commences to be treated as a
resident of a foreign country under the
provisions of a tax treaty between the
United States and the foreign country
and who does not waive the benefits of
such treaty applicable to residents of
the foreign country.
``(2) Expatriation date.--The term `expatriation
date' means--
``(A) the date an individual relinquishes
United States citizenship, or
``(B) in the case of a long-term resident of
the United States, the date of the event
described in clause (i) or (ii) of paragraph
(1)(B).
``(3) Relinquishment of citizenship.--A citizen shall
be treated as relinquishing his United States
citizenship on the earliest of--
``(A) the date the individual renounces his
United States nationality before a diplomatic
or consular officer of the United States
pursuant to paragraph (5) of section 349(a) of
the Immigration and Nationality Act (8 U.S.C.
1481(a)(5)),
``(B) the date the individual furnishes to
the United States Department of State a signed
statement of voluntary relinquishment of United
States nationality confirming the performance
of an act of expatriation specified in
paragraph (1), (2), (3), or (4) of section
349(a) of the Immigration and Nationality Act
(8 U.S.C. 1481(a)(1)-(4)),
``(C) the date the United States Department
of State issues to the individual a certificate
of loss of nationality, or
``(D) the date a court of the United States
cancels a naturalized citizen's certificate of
naturalization.
Subparagraph (A) or (B) shall not apply to any
individual unless the renunciation or voluntary
relinquishment is subsequently approved by the issuance
to the individual of a certificate of loss of
nationality by the United States Department of State.
``(4) Long-term resident.--
``(A) In general.--The term `long-term
resident' means any individual (other than a
citizen of the United States) who is a lawful
permanent resident of the United States in at
least 8 taxable years during the period of 15
taxable years ending with the taxable year
during which the expatriation date occurs. For
purposes of the preceding sentence, an
individual shall not be treated as a lawful
permanent resident for any taxable year if such
individual is treated as a resident of a
foreign country for the taxable year under the
provisions of a tax treaty between the United
States and the foreign country and does not
waive the benefits of such treaty applicable to
residents of the foreign country.
``(B) Special rule.--For purposes of
subparagraph (A), there shall not be taken into
account--
``(i) any taxable year during which
any prior sale is treated under
subsection (a)(1) as occurring, or
``(ii) any taxable year prior to the
taxable year referred to in clause (i).
``(f) Special Rules Applicable to Beneficiaries' Interests in
Trust.--
``(1) In general.--Except as provided in paragraph
(2), if an individual is determined under paragraph (3)
to hold an interest in a trust--
``(A) the individual shall not be treated as
having sold such interest,
``(B) such interest shall be treated as a
separate share in the trust, and
``(C)(i) such separate share shall be treated
as a separate trust consisting of the assets
allocable to such share,
``(ii) the separate trust shall be treated as
having sold its assets immediately before the
expatriation date for their fair market value
and as having distributed all of its assets to
the individual as of such time, and
``(iii) the individual shall be treated as
having recontributed the assets to the separate
trust.
Subsection (a)(2) shall apply to any income, gain, or
loss of the individual arising from a distribution
described in subparagraph (C)(ii).
``(2) Special rules for interests in qualified
trusts.--
``(A) In general.--If the trust interest
described in paragraph (1) is an interest in a
qualified trust--
``(i) paragraph (1) and subsection
(a) shall not apply, and
``(ii) in addition to any other tax
imposed by this title, there is hereby
imposed on each distribution with
respect to such interest a tax in the
amount determined under subparagraph
(B).
``(B) Amount of tax.--The amount of tax under
subparagraph (A)(ii) shall be equal to the
lesser of--
``(i) the highest rate of tax imposed
by section 1(e) for the taxable year in
which the expatriation date occurs,
multiplied by the amount of the
distribution, or
``(ii) the balance in the deferred
tax account immediately before the
distribution determined without regard
to any increases under subparagraph
(C)(ii) after the 30th day preceding
the distribution.
``(C) Deferred tax account.--For purposes of
subparagraph (B)(ii)--
``(i) Opening balance.--The opening
balance in a deferred tax account with
respect to any trust interest is an
amount equal to the tax which would
have been imposed on the allocable
expatriation gain with respect to the
trust interest if such gain had been
included in gross income under
subsection (a).
``(ii) Increase for interest.--The
balance in the deferred tax account
shall be increased by the amount of
interest determined (on the balance in
the account at the time the interest
accrues), for periods after the 90th
day after the expatriation date, by
using the rates and method applicable
under section 6621 for underpayments of
tax for such periods.
``(iii) Decrease for taxes previously
paid.--The balance in the tax deferred
account shall be reduced--
``(I) by the amount of taxes
imposed by subparagraph (A) on
any distribution to the person
holding the trust interest, and
``(II) in the case of a
person holding a nonvested
interest, to the extent
provided in regulations, by the
amount of taxes imposed by
subparagraph (A) on
distributions from the trust
with respect to nonvested
interests not held by such
person.
``(D) Allocable expatriation gain.--For
purposes of this paragraph, the allocable
expatriation gain with respect to any
beneficiary's interest in a trust is the amount
of gain which would be allocable to such
beneficiary's vested and nonvested interests in
the trust if the beneficiary held directly all
assets allocable to such interests.
``(E) Tax deducted and withheld.--
``(i) In general.--The tax imposed by
subparagraph (A)(ii) shall be deducted
and withheld by the trustees from the
distribution to which it relates.
``(ii) Exception where failure to
waive treaty rights.--If an amount may
not be deducted and withheld under
clause (i) by reason of the distributee
failing to waive any treaty right with
respect to such distribution--
``(I) the tax imposed by
subparagraph (A)(ii) shall be
imposed on the trust and each
trustee shall be personally
liable for the amount of such
tax, and
``(II) any other beneficiary
of the trust shall be entitled
to recover from the distributee
the amount of such tax imposed
on the other beneficiary.
``(F) Disposition.--If a trust ceases to be a
qualified trust at any time, a covered
expatriate disposes of an interest in a
qualified trust, or a covered expatriate
holding an interest in a qualified trust dies,
then, in lieu of the tax imposed by
subparagraph (A)(ii), there is hereby imposed a
tax equal to the lesser of--
``(i) the tax determined under
paragraph (1) as if the expatriation
date were the date of such cessation,
disposition, or death, whichever is
applicable, or
``(ii) the balance in the tax
deferred account immediately before
such date.
Such tax shall be imposed on the trust and each
trustee shall be personally liable for the
amount of such tax and any other beneficiary of
the trust shall be entitled to recover from the
covered expatriate or the estate the amount of
such tax imposed on the other beneficiary.
``(G) Definitions and special rule.--For
purposes of this paragraph--
``(i) Qualified trust.--The term
`qualified trust' means a trust--
``(I) which is organized
under, and governed by, the
laws of the United States or a
State, and
``(II) with respect to which
the trust instrument requires
that at least 1 trustee of the
trust be an individual citizen
of the United States or a
domestic corporation.
``(ii) Vested interest.--The term
`vested interest' means any interest
which, as of the expatriation date, is
vested in the beneficiary.
``(iii) Nonvested interest.--The term
`nonvested interest' means, with
respect to any beneficiary, any
interest in a trust which is not a
vested interest. Such interest shall be
determined by assuming the maximum
exercise of discretion in favor of the
beneficiary and the occurrence of all
contingencies in favor of the
beneficiary.
``(iv) Adjustments.--The Secretary
may provide for such adjustments to the
bases of assets in a trust or a
deferred tax account, and the timing of
such adjustments, in order to ensure
that gain is taxed only once.
``(3) Determination of beneficiaries' interest in
trust.--
``(A) Determinations under paragraph (1).--
For purposes of paragraph (1), a beneficiary's
interest in a trust shall be based upon all
relevant facts and circumstances, including the
terms of the trust instrument and any letter of
wishes or similar document, historical patterns
of trust distributions, and the existence of
and functions performed by a trust protector or
any similar advisor.
``(B) Other determinations.--For purposes of
this section--
``(i) Constructive ownership.--If a
beneficiary of a trust is a
corporation, partnership, trust, or
estate, the shareholders, partners, or
beneficiaries shall be deemed to be the
trust beneficiaries for purposes of
this section.
``(ii) Taxpayer return position.--A
taxpayer shall clearly indicate on its
income tax return--
``(I) the methodology used to
determine that taxpayer's trust
interest under this section,
and
``(II) if the taxpayer knows
(or has reason to know) that
any other beneficiary of such
trust is using a different
methodology to determine such
beneficiary's trust interest
under this section.
``(g) Termination of Deferrals, Etc.--On the date any
property held by an individual is treated as sold under
subsection (a), notwithstanding any other provision of this
title--
``(1) any period during which recognition of income
or gain is deferred shall terminate, and
``(2) any extension of time for payment of tax shall
cease to apply and the unpaid portion of such tax shall
be due and payable at the time and in the manner
prescribed by the Secretary.
``(h) Imposition of Tentative Tax.--
``(1) In general.--If an individual is required to
include any amount in gross income under subsection (a)
for any taxable year, there is hereby imposed,
immediately before the expatriation date, a tax in an
amount equal to the amount of tax which would be
imposed if the taxable year were a short taxable year
ending on the expatriation date.
``(2) Due date.--The due date for any tax imposed by
paragraph (1) shall be the 90th day after the
expatriation date.
``(3) Treatment of tax.--Any tax paid under paragraph
(1) shall be treated as a payment of the tax imposed by
this chapter for the taxable year to which subsection
(a) applies.
``(4) Deferral of tax.--The provisions of subsection
(b) shall apply to the tax imposed by this subsection
to the extent attributable to gain includible in gross
income by reason of this section.
``(i) Coordination With Estate and Gift Taxes.--If subsection
(a) applies to property held by an individual for any taxable
year and--
``(1) such property is includible in the gross estate
of such individual solely by reason of section 2107, or
``(2) section 2501 applies to a transfer of such
property by such individual solely by reason of section
2501(a)(3),
then there shall be allowed as a credit against the additional
tax imposed by section 2101 or 2501, whichever is applicable,
solely by reason of section 2107 or 2501(a)(3) an amount equal
to the increase in the tax imposed by this chapter for such
taxable year by reason of this section.
``(j) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out the
purposes of this section, including regulations--
``(1) to prevent double taxation by ensuring that--
``(A) appropriate adjustments are made to
basis to reflect gain recognized by reason of
subsection (a) and the exclusion provided by
subsection (a)(3), and
``(B) any gain by reason of a deemed sale
under subsection (a) of an interest in a
corporation, partnership, trust, or estate is
reduced to reflect that portion of such gain
which is attributable to an interest in a trust
which a shareholder, partner, or beneficiary is
treated as holding directly under subsection
(f)(3)(B)(i), and
``(2) which provide for the proper allocation of the
exclusion under subsection (a)(3) to property to which
this section applies.
``(k) Cross Reference.--
``For income tax treatment of individuals who terminate United
States citizenship, see section 7701(a)(47).''.
(b) Inclusion in Income of Gifts and Inheritances From
Covered Expatriates.--Section 102 (relating to gifts, etc. not
included in gross income) is amended by adding at the end the
following new subsection:
``(d) Gifts and Inheritances From Covered Expatriates.--
Subsection (a) shall not exclude from gross income the value of
any property acquired by gift, bequest, devise, or inheritance
from a covered expatriate after the expatriation date. For
purposes of this subsection, any term used in this subsection
which is also used in section 877A shall have the same meaning
as when used in section 877A.''.
(c) Definition of Termination of United States Citizenship.--
Section 7701(a) is amended by adding at the end the following
new paragraph:
``(47) Termination of united states citizenship.--An
individual shall not cease to be treated as a United
States citizen before the date on which the
individual's citizenship is treated as relinquished
under section 877A(e)(3).''.
(d) Conforming Amendments.--
(1) Section 877 is amended by adding at the end the
following new subsection:
``(f) Application.--This section shall not apply to any
individual who relinquishes (within the meaning of section
877A(e)(3)) United States citizenship on or after February 6,
1995.''.
(2) Section 2107(c) is amended by adding at the end
the following new paragraph:
``(3) Cross reference.--For credit against the tax
imposed by subsection (a) for expatriation tax, see
section 877A(i).''.
(3) Section 2501(a)(3) is amended by adding at the
end the following new flush sentence:
``For credit against the tax imposed under this section
by reason of this paragraph, see section 877A(i).''.
(4) Paragraph (10) of section 7701(b) is amended by
adding at the end the following new sentence: ``This
paragraph shall not apply to any long-term resident of
the United States who is an expatriate (as defined in
section 877A(e)(1)).''.
(e) Clerical Amendment.--The table of sections for subpart A
of part II of subchapter N of chapter 1 is amended by inserting
after the item relating to section 877 the following new item:
``Sec. 877A. Tax responsibilities of expatriation.''.
(f) Effective Date.--
(1) In general.--Except as provided in this
subsection, the amendments made by this section shall
apply to expatriates (within the meaning of section
877A(e) of the Internal Revenue Code of 1986, as added
by this section) whose expatriation date (as so
defined) occurs on or after February 6, 1995.
(2) Gifts and bequests.--Section 102(d) of the
Internal Revenue Code of 1986 (as added by subsection
(b)) shall apply to amounts received from expatriates
(as so defined) whose expatriation date (as so defined)
occurs on and after February 6, 1995.
(3) Special rules relating to certain acts occurring
before february 6, 1995.--In the case of an individual
who took an act of expatriation specified in paragraph
(1), (2), (3), or (4) of section 349(a) of the
Immigration and Nationality Act (8 U.S.C. 1481(a) (1)-
(4)) before February 6, 1995, but whose expatriation
date (as so defined) occurs after February 6, 1995--
(A) the amendment made by subsection (c)
shall not apply,
(B) the amendment made by subsection (d)(1)
shall not apply for any period prior to the
expatriation date, and
(C) the other amendments made by this section
shall apply as of the expatriation date.
(4) Due date for tentative tax.--The due date under
section 877A(h)(2) of such Code shall in no event occur
before the 90th day after the date of the enactment of
this Act.
SEC. ____102. INFORMATION ON INDIVIDUALS EXPATRIATING.
(a) In General.--Subpart A of part III of subchapter A of
chapter 61 is amended by inserting after section 6039E the
following new section:
``SEC. 6039F. INFORMATION ON INDIVIDUALS EXPATRIATING.
``(a) Requirement.--
``(1) In general.--Notwithstanding any other
provision of law, any expatriate (within the meaning of
section 877A(e)(1)) shall provide a statement which
includes the information described in subsection (b).
``(2) Timing.--
``(A) Citizens.--In the case of an expatriate
described in section 877(e)(1)(A), such
statement shall be--
``(i) provided not later than the
expatriation date (within the meaning
of section 877A(e)(2)), and
``(ii) provided to the person or
court referred to in section
877A(e)(3).
``(B) Noncitizens.--In the case of an
expatriate described in section 877A(e)(1)(B),
such statement shall be provided to the
Secretary with the return of tax imposed by
chapter 1 for the taxable year during which the
event described in such section occurs.
``(b) Information To Be Provided.--Information required under
subsection (a) shall include--
``(1) the taxpayer's TIN,
``(2) the mailing address of such individual's
principal foreign residence,
``(3) the foreign country in which such individual is
residing,
``(4) the foreign country of which such individual is
a citizen,
``(5) in the case of an individual having a net worth
of at least the dollar amount applicable under section
877A(c)(1)(B), information detailing the assets and
liabilities of such individual, and
``(6) such other information as the Secretary may
prescribe.
``(c) Penalty.--Any individual failing to provide a statement
required under subsection (a) shall be subject to a penalty for
each year during any portion of which such failure continues in
an amount equal to the greater of--
``(1) 5 percent of the additional tax required to be
paid under section 877A for such year, or
``(2) $1,000,
unless it is shown that such failure is due to reasonable cause
and not to willful neglect.
``(d) Information To Be Provided to Secretary.--
Notwithstanding any other provision of law--
``(1) any Federal agency or court which collects (or
is required to collect) the statement under subsection
(a) shall provide to the Secretary--
``(A) a copy of any such statement, and
``(B) the name (and any other identifying
information) of any individual refusing to
comply with the provisions of subsection (a),
``(2) the Secretary of State shall provide to the
Secretary a copy of each certificate as to the loss of
American nationality under section 358 of the
Immigration and Nationality Act which is approved by
the Secretary of State, and
``(3) the Federal agency primarily responsible for
administering the immigration laws shall provide to the
Secretary the name of each lawful permanent resident of
the United States (within the meaning of section
7701(b)(6)) whose status as such has been revoked or
has been administratively or judicially determined to
have been abandoned.
Notwithstanding any other provision of law, not later than 30
days after the close of each calendar quarter, the Secretary
shall publish in the Federal Register the name of each
individual relinquishing United States citizenship (within the
meaning of section 877A(e)(3)) with respect to whom the
Secretary receives information under the preceding sentence
during such quarter.
``(e) Exemption.--The Secretary may by regulations exempt any
class of individuals from the requirements of this section if
the Secretary determines that applying this section to such
individuals is not necessary to carry out the purposes of this
section.''.
(b) Clerical Amendment.--The table of sections for such
subpart A is amended by inserting after the item relating to
section 6039E the following new item:
``Sec. 6039F. Information on individuals expatriating.''.
(c) Effective Date.--The amendments made by this section
shall apply to individuals to whom section 877A of the Internal
Revenue Code of 1986 applies and whose expatriation date (as
defined in section 877A(e)(2)) occurs on or after February 6,
1995, except that no statement shall be required by such
amendments before the 90th day after the date of the enactment
of this Act.
Subtitle B--Corporate Reforms
SEC. ____201. TAX TREATMENT OF CERTAIN EXTRAORDINARY DIVIDENDS.
(a) Treatment of Extraordinary Dividends in Excess of
Basis.--Paragraph (2) of section 1059(a) (relating to corporate
shareholder's basis in stock reduced by nontaxed portion of
extraordinary dividends) is amended to read as follows:
``(2) Amounts in excess of basis.--If the nontaxed
portion of such dividends exceeds such basis, such
excess shall be treated as gain from the sale or
exchange of such stock for the taxable year in which
the extraordinary dividend is received.''.
(b) Treatment of Redemptions Where Options Involved.--
Paragraph (1) of section 1059(e) (relating to treatment of
partial liquidations and non-pro rata redemptions) is amended
to read as follows:
``(1) Treatment of partial liquidations and certain
redemptions.--Except as otherwise provided in
regulations--
``(A) Redemptions.--In the case of any
redemption of stock--
``(i) which is part of a partial
liquidation (within the meaning of
section 302(e)) of the redeeming
corporation,
``(ii) which is not pro rata as to
all shareholders, or
``(iii) which would not have been
treated (in whole or in part) as a
dividend if any options had not been
taken into account under section
318(a)(4),
any amount treated as a dividend with respect
to such redemption shall be treated as an
extraordinary dividend to which paragraphs (1)
and (2) of subsection (a) apply without regard
to the period the taxpayer held such stock. In
the case of a redemption described in clause
(iii), only the basis in the stock redeemed
shall be taken into account under subsection
(a).
``(B) Reorganizations, etc.--An exchange
described in section 356(a)(1) which is treated
as a dividend under section 356(a)(2) shall be
treated as a redemption of stock for purposes
of applying subparagraph (A).''.
(c) Effective Dates.--
(1) In general.--The amendments made by this section
shall apply to distributions after May 3, 1995.
(2) Transition rule.--The amendments made by this
section shall not apply to any distribution made
pursuant to the terms of--
(A) a written binding contract in effect on
May 3, 1995, and at all times thereafter before
such distribution, or
(B) a tender offer outstanding on May 3,
1995.
(3) Certain dividends not pursuant to certain
redemptions.--In determining whether the amendment made
by subsection (a) applies to any extraordinary dividend
other than a dividend treated as an extraordinary
dividend under section 1059(e)(1) of the Internal
Revenue Code of 1986 (as amended by this Act),
paragraphs (1) and (2) shall be applied by substituting
``September 13, 1995'' for ``May 3, 1995''.
SEC. ____202. REGISTRATION OF CONFIDENTIAL CORPORATE TAX SHELTERS.
(a) In General.--Section 6111 (relating to registration of
tax shelters) is amended by redesignating subsections (d) and
(e) as subsections (e) and (f), respectively, and by inserting
after subsection (c) the following new subsection:
``(d) Certain Confidential Arrangements Treated as Tax
Shelters.--
``(1) In general.--For purposes of this section, the
term `tax shelter' includes any entity, plan,
arrangement, or transaction--
``(A) a significant purpose of the structure
of which is the avoidance or evasion of Federal
income tax for a direct or indirect participant
which is a corporation,
``(B) which is offered to any potential
participant under conditions of
confidentiality, and
``(C) for which the tax shelter promoters may
receive fees in excess of $100,000 in the
aggregate.
``(2) Conditions of confidentiality.--For purposes of
paragraph (1)(B), an offer is under conditions of
confidentiality if--
``(A) the potential participant to whom the
offer is made (or any other person acting on
behalf of such participant) has an
understanding or agreement with or for the
benefit of any promoter of the tax shelter that
such participant (or such other person) will
limit disclosure of the tax shelter or any
significant tax features of the tax shelter, or
``(B) any promoter of the tax shelter--
``(i) claims, knows, or has reason to
know,
``(ii) knows or has reason to know
that any other person (other than the
potential participant) claims, or
``(iii) causes another person to
claim,
that the tax shelter (or any aspect thereof) is
proprietary to any person other than the
potential participant or is otherwise protected
from disclosure to or use by others.
For purposes of this subsection, the term `promoter'
means any person or any related person (within the
meaning of section 267 or 707) who participates in the
organization, management, or sale of the tax shelter.
``(3) Persons other than promoter required to
register in certain cases.--
``(A) In general.--If--
``(i) the requirements of subsection
(a) are not met with respect to any tax
shelter (as defined in paragraph (1))
by any tax shelter promoter, and
``(ii) no tax shelter promoter is a
United States person,
then each United States person who discussed
participation in such shelter shall register
such shelter under subsection (a).
``(B) Exception.--Subparagraph (A) shall not
apply to a United States person who discussed
participation in a tax shelter if--
``(i) such person notified the
promoter in writing (not later than the
close of the 90th day after the day on
which such discussions began) that such
person would not participate in such
shelter, and
``(ii) such person does not
participate in such shelter.
``(4) Offer to participate treated as offer for
sale.--For purposes of subsections (a) and (b), an
offer to participate in a tax shelter (as defined in
paragraph (1)) shall be treated as an offer for
sale.''.
(b) Penalty.--Subsection (a) of section 6707 (relating to
failure to furnish information regarding tax shelters) is
amended by adding at the end the following new paragraph:
``(3) Confidential arrangements.--
``(A) In general.--In the case of a tax
shelter (as defined in section 6111(d)), the
penalty imposed under paragraph (1) shall be an
amount equal to the greater of--
``(i) 50 percent of the fees paid to
any promoter of the tax shelter with
respect to offerings made before the
date such shelter is registered under
section 6111, or
``(ii) $10,000.
Clause (i) shall be applied by substituting `75
percent' for `50 percent' in the case of an
intentional failure or act described in
paragraph (1).
``(B) Special rule for participants required
to register shelter.--In the case of a person
required to register such a tax shelter by
reason of section 6111(d)(3)--
``(i) such person shall be required
to pay the penalty under paragraph (1)
only if such person actually
participated in such shelter,
``(ii) the amount of such penalty
shall be determined by taking into
account under subparagraph (A)(i) only
the fees paid by such person, and
``(iii) such penalty shall be in
addition to the penalty imposed on any
other person for failing to register
such shelter.''.
(c) Conforming Amendments.--
(1) Paragraph (2) of section 6707(a) is amended by
striking ``The penalty'' and inserting ``Except as
provided in paragraph (3), the penalty''.
(2) Subparagraph (A) of section 6707(a)(1) is amended
by striking ``paragraph (2)'' and inserting ``paragraph
(2) or (3), as the case may be''.
(d) Effective Date.--The amendments made by this section
shall apply to any tax shelter (as defined in section 6111(d)
of the Internal Revenue Code of 1986, as amended by this
section) interests in which are offered to potential
participants after the Secretary of the Treasury prescribes
guidance with respect to meeting requirements added by such
amendments.
SEC. ____203. DENIAL OF DEDUCTION FOR INTEREST ON LOANS WITH RESPECT TO
COMPANY-OWNED INSURANCE.
(a) In General.--Paragraph (4) of section 264(a) is amended--
(1) by inserting ``, or any endowment or annuity
contracts owned by the taxpayer covering any
individual,'' after ``the life of any individual'', and
(2) by striking all that follows ``carried on by the
taxpayer'' and inserting a period.
(b) Exception for Contracts Relating to Key Persons;
Permissible Interest Rates.--Section 264 is amended--
(1) by striking ``Any'' in subsection (a)(4) and
inserting ``Except as provided in subsection (d),
any'', and
(2) by adding at the end the following new
subsection:
``(d) Special Rules For Application of Subsection (a)(4).--
``(1) Exception for key persons.--Subsection (a)(4)
shall not apply to any interest paid or accrued on any
indebtedness with respect to policies or contracts
covering an individual who is a key person to the
extent that the aggregate amount of such indebtedness
with respect to policies and contracts covering such
individual does not exceed $50,000.
``(2) Interest rate cap on key persons and pre-1986
contracts.--
``(A) In general.--No deduction shall be
allowed by reason of paragraph (1) or the last
sentence of subsection (a) with respect to
interest paid or accrued for any month to the
extent the amount of such interest exceeds the
amount which would have been determined if the
applicable rate of interest were used for such
month.
``(B) Applicable rate of interest.--For
purposes of subparagraph (A)--
``(i) In general.--The applicable
rate of interest for any month is the
rate of interest described as Moody's
Corporate Bond Yield Average-Monthly
Average Corporates as published by
Moody's Investors Service, Inc., or any
successor thereto, for such month.
``(ii) Pre-1986 contract.--In the
case of indebtedness on a contract to
which the last sentence of subsection
(a) applies--
``(I) which is a contract
providing a fixed rate of
interest, the applicable rate
of interest for any month shall
be the Moody's rate described
in clause (i) for the month in
which the contract was
purchased, or
``(II) which is a contract
providing a variable rate of
interest, the applicable rate
of interest for any month in an
applicable period shall be such
Moody's rate for the second
month preceding the first month
in such period.
For purposes of subclause (II), the
taxpayer shall elect an applicable
period for such contract on its return
of tax imposed by this chapter for its
first taxable year ending on or after
October 13, 1995. Such applicable
period shall be for any number of
months (not greater than 12) specified
in the election and may not be changed
by the taxpayer without the consent of
the Secretary.
``(3) Key person.--For purposes of paragraph (1), the
term `key person' means an officer or 20-percent owner,
except that the number of individuals who may be
treated as key persons with respect to any taxpayer
shall not exceed the greater of--
``(A) 5 individuals, or
``(B) the lesser of 5 percent of the total
officers and employees of the taxpayer or 10
individuals.
``(4) 20-percent owner.--For purposes of this
subsection, the term `20-percent owner' means--
``(A) if the taxpayer is a corporation, any
person who owns directly 20 percent or more of
the outstanding stock of the corporation or
stock possessing 20 percent or more of the
total combined voting power of all stock of the
corporation, or
``(B) if the taxpayer is not a corporation,
any person who owns 20 percent or more of the
capital or profits interest in the employer.
``(5) Aggregation rules.--
``(A) In general.--For purposes of paragraph
(4)(A) and applying the $50,000 limitation in
paragraph (1)--
``(i) all members of a controlled
group shall be treated as 1 taxpayer,
and
``(ii) such limitation shall be
allocated among the members of such
group in such manner as the Secretary
may prescribe.
``(B) Controlled group.--For purposes of this
paragraph, all persons treated as a single
employer under subsection (a) or (b) of section
52 or subsection (m) or (o) of section 414
shall be treated as members of a controlled
group.''.
(c) Effective Dates.--
(1) In general.--The amendments made by this section
shall apply to interest paid or accrued after October
13, 1995.
(2) Transition rule for existing indebtedness.--
(A) In general.--In the case of--
(i) indebtedness incurred before
January 1, 1996, or
(ii) indebtedness incurred before
January 1, 1997, with respect to any
contract or policy entered into in 1994
or 1995,
the amendments made by this section shall not
apply to qualified interest paid or accrued on
such indebtedness after October 13, 1995, and
before January 1, 1999.
(B) Qualified interest.--For purposes of
subparagraph (A), the qualified interest with
respect to any indebtedness for any month is
the applicable percentage of the amount of
interest (otherwise deductible) which would be
paid or accrued for such month on such
indebtedness if--
(i) in the case of any interest paid
or accrued after December 31, 1995,
indebtedness with respect to no more
than 20,000 insured individuals were
taken into account, and
(ii) the lesser of the following
rates of interest were used for such
month:
(I) The rate of interest
specified under the terms of
the indebtedness as in effect
on October 13, 1995 (and
without regard to modification
of such terms after such date).
(II) The rate of interest
described as Moody's Corporate
Bond Yield Average-Monthly
Average Corporates as published
by Moody's Investors Service,
Inc., or any successor thereto,
for such month.
For purposes of clause (i), all persons treated
as a single employer under subsection (a) or
(b) of section 52 of the Internal Revenue Code
of 1986 or subsection (m) or (o) of section 414
of such Code shall be treated as one person.
(C) Applicable percentage.--For purposes of
subparagraph (B), the applicable percentage is
as follows:
For calendar year: The percentage is:
1995............................................ 100 percent
1996............................................ 90 percent
1997............................................ 80 percent
1998............................................ 70 percent.
(3) Special rule for grandfathered contracts.--This
section shall not apply to any contract purchased on or
before June 20, 1986, except that section 264(d)(2) of
the Internal Revenue Code of 1986 shall apply to
interest paid or accrued after October 13, 1995.
(d) Spread of Income Inclusion on Surrender, Etc. of
Contracts.--
(1) In general.--If any amount is received under any
life insurance policy or endowment or annuity contract
described in paragraph (4) of section 264(a) of the
Internal Revenue Code of 1986--
(A) on the complete surrender, redemption, or
maturity of such policy or contract during
calendar year 1996, 1997, or 1998, or
(B) in full discharge during any such
calendar year of the obligation under the
policy or contract which is in the nature of a
refund of the consideration paid for the policy
or contract,
then (in lieu of any other inclusion in gross income)
such amount shall be includible in gross income ratably
over the 4-taxable year period beginning with the
taxable year such amount would (but for this paragraph)
be includible. The preceding sentence shall only apply
to the extent the amount is includible in gross income
for the taxable year in which the event described in
subparagraph (A) or (B) occurs.
(2) Special rules for applying section 264.--A
contract shall not be treated as--
(A) failing to meet the requirement of
section 264(c)(1) of the Internal Revenue Code
of 1986, or
(B) a single premium contract under section
264(b)(1) of such Code,
solely by reason of an occurrence described in
subparagraph (A) or (B) of paragraph (1) of this
subsection or solely by reason of no additional
premiums being received under the contract by reason of
a lapse occurring after October 13, 1995.
(3) Special rule for deferred acquisition costs.--In
the case of the occurrence of any event described in
subparagraph (A) or (B) of paragraph (1) of this
subsection with respect to any policy or contract--
(A) section 848 of the Internal Revenue Code
of 1986 shall not apply to the unamortized
balance (if any) of the specified policy
acquisition expenses attributable to such
policy or contract immediately before the
insurance company's taxable year in which such
event occurs, and
(B) there shall be allowed as a deduction to
such company for such taxable year under
chapter 1 of such Code an amount equal to such
unamortized balance.
SEC. ____204. TERMINATION OF SUSPENSE ACCOUNTS FOR FAMILY CORPORATIONS
REQUIRED TO USE ACCRUAL METHOD OF ACCOUNTING.
(a) In General.--Subsection (i) of section 447 (relating to
method of accounting for corporations engaged in farming) is
amended by adding at the end the following new paragraph:
``(7) Termination.--
``(A) In general.--No suspense account may be
established under this subsection by any
corporation required by this section to change
its method of accounting for any taxable year
ending after September 13, 1995.
``(B) 20-year phaseout of existing suspense
accounts.--Each suspense account under this
subsection shall be reduced (but not below
zero) for each of the first 20 taxable years
beginning after September 13, 1995, by an
amount equal to the applicable portion of such
account. Any reduction in a suspense account
under this paragraph shall be included in gross
income for the taxable year of the reduction.
The amount of the reduction required under this
paragraph for any taxable year shall be reduced
(but not below zero) by the amount of any
reduction required for such taxable year under
any other provision of this subsection.
``(C) Applicable portion.--For purposes of
subparagraph (B), the term `applicable portion'
means, for any taxable year, the amount which
would ratably reduce the amount in the account
(after taking into account prior reductions) to
zero over the period consisting of such taxable
year and the remaining taxable years in such
first 20 taxable years.''.
(b) Effective Date.--The amendment made by this section shall
apply to taxable years ending after September 13, 1995.
SEC. ____205. MODIFICATIONS OF PUERTO RICO AND POSSESSIONS TAX CREDIT.
(a) Phaseout of Reduced Credit.--The table contained in
clause (ii) of section 936(a)(4)(B) (relating to election to
take reduced credit) is amended to read as follows:
``In the case of taxable years beginning in:
The percentage is:
1996...................................................... 50
1997...................................................... 36
1998...................................................... 24
1999...................................................... 16
2000...................................................... 8
2001 and thereafter....................................... 0.''
(b) Carryover of Excess Economic Activity Credit.--
(1) In general.--Section 936(a)(4) is amended by
redesignating subparagraph (C) as subparagraph (D) and
by inserting after subparagraph (B) the following new
subparagraph:
``(C) Carryover of excess economic activity
credit.--
``(i) In general.--If the amount
determined under subparagraph (A) for
any taxable year exceeds the amount of
the credit determined under paragraph
(1) for such taxable year with respect
to income referred to in paragraph
(1)(A), the amount determined under
subparagraph (A) for the following
taxable year shall be increased by the
amount of such excess.
``(ii) Limitation.--Any excess
described in clause (i) may not be
carried to any taxable year after the
5th taxable year following the taxable
year in which it arises.
``(iii) Ordering rule.--For purposes
of applying subparagraph (A), the
limitation under subparagraph (A) shall
be treated as used on a first-in,
first-out basis.''
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 1995.
SEC. ____206. PERSONAL PROPERTY USED PREDOMINANTLY IN THE UNITED STATES
TREATED AS NOT PROPERTY OF A LIKE KIND WITH RESPECT
TO PROPERTY USED PREDOMINANTLY OUTSIDE THE UNITED
STATES.
(a) In General.--Subsection (h) of section 1031 (relating to
exchange of property held for productive use or investment) is
amended to read as follows:
``(h) Special Rules for Foreign Real and Personal Property.--
For purposes of this section--
``(1) Real property.--Real property located in the
United States and real property located outside the
United States are not property of a like kind.
``(2) Personal property.--
``(A) In general.--Personal property used
predominantly within the United States and
personal property used predominantly outside
the United States are not property of a like
kind.
``(B) Predominant use.--Except as provided in
subparagraph (C), the predominant use of any
property shall be determined based on--
``(i) in the case of the property
relinquished in the exchange, the 2-
year period ending on the date of such
relinquishment, and
``(ii) in the case of the property
acquired in the exchange, the 2-year
period beginning on the date of such
acquisition.
``(C) Special rule for certain property.--
Property described in any subparagraph of
section 168(g)(4) shall be treated as used
predominantly in the United States.''
(b) Effective Date.--
(1) In general.--The amendment made by this section
shall apply to transfers after December 6, 1995, in
taxable years ending after such date.
(2) Binding contracts.--The amendment made by this
section shall not apply to any transfer pursuant to a
written binding contract in effect on December 6, 1995,
and at all times thereafter before the disposition or
acquisition of property. A contract shall not fail to
meet the requirements of the preceding sentence solely
because--
(A) it provides for a sale in lieu of an
exchange, or
(B) the property to be disposed of as
relinquished property, or the property to be
acquired as replacement property, whichever is
applicable, was not identified under such
contract before December 7, 1995.
SEC. ____207. REPEAL OF FINANCIAL INSTITUTION TRANSITION RULE TO
INTEREST ALLOCATION RULES.
(a) In General.--Paragraph (5) of section 1215(c) of the Tax
Reform Act of 1986 (Public Law 99-514, 100 Stat. 2548) is
hereby repealed.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 1995.
SEC. ____208. CONVERSION OF LARGE CORPORATIONS INTO S CORPORATIONS
TREATED AS COMPLETE LIQUIDATION.
(a) In General.--Section 1374 (relating to tax imposed on
certain built-in gains) is amended by redesignating subsection
(e) as subsection (f) and by inserting after subsection (d) the
following new subsection:
``(e) Section Not To Apply to Conversions of Large C
Corporations.--
``(1) In general.--If an S corporation was a large C
corporation for the last taxable year before the first
taxable year for which the election under section
1362(a) was effective--
``(A) the preceding provisions of this
section shall not apply to the S corporation,
but
``(B) for purposes of this title--
``(i) the C corporation shall be
treated as having distributed, as of
the last day of such last taxable year,
all its property to its shareholders in
complete liquidation, and
``(ii) the shareholders shall be
treated as having immediately
contributed such property to the S
corporation in exchange for its stock.
``(2) Special rule for asset acquisitions.--Rules
similar to the rules of paragraph (1) shall apply to
any transaction described in subsection (d)(8) in which
an S corporation acquires assets from a large C
corporation.
``(3) Large c corporation.--For purposes of this
subsection, the term `large C corporation' means a C
corporation the fair market value of all of the stock
of which, as of the close of the last taxable year
described in paragraph (1), is greater than $5,000,000.
(b) Regulatory Authority To Prevent Avoidance.--Section
1374(f), as redesignated by subsection (a), is amended by
inserting ``and regulations preventing avoidance of the
application of subsection (e)'' before the period at the end.
(c) Effective Dates.--
(1) In general.--The amendments made by this section
shall apply to elections under section 1361(a) of the
Internal Revenue Code of 1986 which are made after
December 6, 1995.
(2) Acquisitions.--The provisions of section
1374(e)(2) of such Code (as added by the amendments
made by this section) shall apply to acquisitions after
December 6, 1995, except that such provisions shall not
apply to any acquisition after such date pursuant to a
binding contract in effect on such date and at all
times thereafter before such acquisition.
SEC. ____209. MODIFICATION OF TAXABLE YEARS TO WHICH NET OPERATING
LOSSES MAY BE CARRIED.
(a) In General.--Subparagraph (A) of section 172(b)(1)
(relating to years to which loss may be carried) is amended--
(1) by striking ``3'' in clause (i) and inserting
``1'', and
(2) by striking ``15'' in clause (ii) and inserting
``20''.
(b) Effective Date.--The amendments made by this section
shall apply to net operating losses for taxable years beginning
after December 31, 1995.
SEC. ____210. CONSTRUCTIVE SALES TREATMENT FOR APPRECIATED FINANCIAL
POSITIONS.
(a) In General.--Part IV of subchapter P of chapter 1 is
amended by adding at the end the following new section:
``SEC. 1259. CONSTRUCTIVE SALES TREATMENT FOR APPRECIATED FINANCIAL
POSITIONS.
``(a) In General.--If there is a constructive sale of an
appreciated financial position--
``(1) such position shall be treated as sold for its
fair market value on the date of such constructive sale
(and any gain shall be taken into account for the
taxable year which includes such date), and
``(2) for purposes of applying this title for periods
after the constructive sale--
``(A) proper adjustment shall be made in the
amount of any gain or loss subsequently
realized with respect to such position for any
gain taken into account by reason of paragraph
(1), and
``(B) the holding period of such position
shall be determined as if such position were
originally acquired on the date of such
constructive sale.
``(b) Appreciated Financial Position.--For purposes of this
section--
``(1) In general.--The term `appreciated financial
position' means any position with respect to any stock,
debt instrument, or partnership interest if there would
be gain were such position sold.
``(2) Position.--The term `position' means an
interest, including a futures or forward contract,
short sale, or option.
``(c) Constructive Sale.--For purposes of this section--
``(1) In general.--A taxpayer shall be treated as
having made a constructive sale of an appreciated
financial position if the taxpayer or a related
person--
``(A) enters into 1 or more positions with
respect to the same or substantially identical
property which, for some period, substantially
eliminate both risk of loss and opportunity for
gain on the appreciated financial position, or
``(B) enters into any other transaction which
is marketed or sold as being economically
equivalent to any transaction described in
subparagraph (A).
The transactions described in subparagraph (A) shall
include making a short sale with respect to
substantially identical property, and the granting of a
call option, or the acquisition of a put option, with
respect to the same or substantially identical property
but only if there is a substantial certainty that such
call or put option will be exercised.
``(2) Exception for transactions marked to market.--
The term `constructive sale' shall not include any
transaction if the appreciated financial position which
is part of such transaction is marked to market under
section 475 or 1256.
``(3) Exception for sales of nonpublicly traded
property.--The term `constructive sale' shall not
include any contract for sale of any stock, debt
instrument, or partnership interest which is not a
marketable security (as defined in section 453(f)) if
the sale occurs within 1 year after the date such
contract is entered into.
``(4) Related person.--A person is related to another
person with respect to a transaction if--
``(A) the relationship between such persons
would result in a disallowance of losses under
section 267 or 707(b), and
``(B) such transaction is entered into with a
view toward avoiding the purposes of this
section.
``(d) Special Rules.--
``(1) Transactions covering less than all of
appreciated financial positions.--If there is a
constructive sale of less than all of the appreciated
financial positions held by the taxpayer, subsection
(a) shall apply to such positions in the order in which
acquired or entered into.
``(2) Treatment of subsequent sale of position which
was deemed sold.--If--
``(A) there is a constructive sale of any
appreciated financial position,
``(B) such position is subsequently sold or
otherwise disposed of, and
``(C) at the time of such sale or
disposition, the transaction resulting in the
constructive sale of such position is open,
solely for purposes of determining whether the taxpayer
has entered into a constructive sale of any other
appreciated financial position held by the taxpayer,
the taxpayer shall be treated as entering into such
transaction immediately after such sale or other
disposition.
``(3) Certain trust instruments treated as stock.--
For purposes of this section, an interest in a trust
which is actively traded (within the meaning of section
1092(d)(1)) shall be treated as stock.
``(e) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out the
purposes of this section.''
(b) Clerical Amendment.--The table of sections for such part
IV is amended by adding at the end the following new item:
``Sec. 1259. Constructive sales treatment for appreciated financial
positions.''
(c) Effective Date.--
(1) In general.--The amendments made by this section
shall apply to--
(A) constructive sales after the date of the
enactment of this Act, and
(B) constructive sales after January 4, 1996,
and before the date of the enactment of this
Act but only if the transaction is not closed
before the date which is 30 days after the date
of the enactment of this Act.
In a case to which subparagraph (B) applies, section
1259 of the Internal Revenue Code of 1986 (as added by
this section) shall be applied as if the constructive
sale occurred on the date which is 30 days after the
date of the enactment of this Act.
(2) Special rule.--In the case of a decedent dying
after the date of the enactment of this Act, if--
(A) there was a constructive sale on or
before such date of enactment of any
appreciated financial position, and
(B) on the day before the date of the
decedent's death, the transaction resulting in
the constructive sale of such position is open,
for purposes of the Internal Revenue Code of 1986, such
position (and any property related thereto, as
determined under the principles of section 1259(d)(1)
of such Code (as so added)) shall be treated as
property constituting rights to receive an item of
income in respect of a decedent under section 691 of
such Code.
SEC. ____211. MODIFICATION OF RULES FOR ALLOCATING INTEREST EXPENSE TO
TAX-EXEMPT INTEREST.
(a) Pro Rata Allocation Rules Applicable to Corporations.--
(1) In general.--Paragraph (1) of section 265(b) is
amended by striking ``In the case of a financial
institution'' and inserting ``In the case of a
corporation''.
(2) Only obligations acquired after december 6, 1995
taken into account.--Subparagraph (A) of section
265(b)(2) is amended by striking ``August 7, 1986'' and
inserting ``December 6, 1995 (August 7, 1986, in the
case of a financial institution)''.
(3) Small issuer exception not to apply.--
Subparagraph (A) of section 265(b)(3) is amended by
striking ``Any qualified'' and inserting ``In the case
of a financial institution, any qualified''.
(4) Exception for certain bonds acquired on sale of
goods or services.--Subparagraph (B) of section
265(b)(4) is amended by adding at the end the following
new sentence: ``In the case of a taxpayer other than a
financial institution, such term shall not include a
nonsaleable obligation acquired by such taxpayer in the
ordinary course of business as payment for goods or
services provided by such taxpayer to any State or
local government.''
(5) Look-thru rules for partnerships.--Paragraph (6)
of section 265(b) is amended by adding at the end the
following new subparagraph:
``(C) Look-thru rules for partnerships.--In
the case of a corporation which is a partner in
a partnership, such corporation shall be
treated for purposes of this subsection as
holding directly its allocable share of the
assets of the partnership.''
(6) Application of pro rata disallowance on
affiliated group basis.--Subsection (b) of section 265
is amended by adding at the end the following new
paragraph:
``(7) Application of disallowance on affiliated group
basis.--
``(A) In general.--For purposes of this
subsection, all members of an affiliated group
filing a consolidated return under section 1501
shall be treated as 1 taxpayer.
``(B) Treatment of insurance companies.--This
subsection shall not apply to an insurance
company, and subparagraph (A) shall be applied
without regard to any member of an affiliated
group which is an insurance company.''
(7) Clerical amendment.--The subsection heading for
section 265(b) is amended by striking ``Financial
Institutions'' and inserting ``Corporations''.
(b) Application of Section 265(a)(2) With Respect to
Controlled Groups.--Paragraph (2) of section 265(a) is amended
after ``obligations'' by inserting ``held by the taxpayer (or
any corporation which is a member of a controlled group (as
defined in section 267(f)(1)) which includes the taxpayer)''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 1995.
SEC. ____212. REDUCTION OF 70 PERCENT DIVIDENDS RECEIVED DEDUCTION TO
50 PERCENT.
(a) In General.--Paragraph (1) of section 243(a) (relating to
dividends received by corporations) is amended by striking ``70
percent'' and inserting ``50 percent''.
(b) Conforming Changes.--Each of the following provisions is
amended by striking ``70 percent'' and inserting ``50
percent'':
(1) Section 243(c)(1).
(2) Subsections (a)(3) and (b)(2) of section 244.
(3) Section 245(c)(1)(B).
(4) Section 246(b)(3)(B).
(5) Section 246A(a)(1).
(c) Effective Date.--The amendments made by this section
shall apply to dividends received or accrued after January 31,
1996.
SEC. ____213. MODIFICATION OF HOLDING PERIOD APPLICABLE TO DIVIDENDS
RECEIVED DEDUCTION.
(a) In General.--Subparagraph (A) of section 246(c)(1) is
amended to read as follows:
``(A) which is held by the taxpayer for 45
days or less during the 90-day period beginning
on the date which is 45 days before the date on
which such share becomes ex-dividend with
respect to such dividend, or''.
(b) Conforming Amendments.--
(1) Paragraph (2) of section 246(c) is amended to
read as follows:
``(2) 90-day rule in the case of certain preference
dividends.--In the case of stock having preference in
dividends, if the taxpayer receives dividends with
respect to such stock which are attributable to a
period or periods aggregating in excess of 366 days,
paragraph (1)(A) shall be applied--
``(A) by substituting `90 days' for `45 days'
each place it appears, and
``(B) by substituting `180-day period' for
`90-day period'.''
(2) Paragraph (3) of section 246(c) is amended by
adding ``and'' at the end of subparagraph (A), by
striking subparagraph (B), and by redesignating
subparagraph (C) as subparagraph (B).
(c) Effective Date.--The amendments made by this section
shall apply to dividends received or accrued after January 31,
1996.
SEC. ____214. CERTAIN PREFERRED STOCK TREATED AS BOOT.
(a) Section 351.--Section 351 (relating to transfer to
corporation controlled by transferor) is amended by
redesignating subsection (g) as subsection (h) and by inserting
after subsection (f) the following new subsection:
``(g) Nonqualified Preferred Stock Not Treated as Stock.--
``(1) In general.--For purposes of subsections (a)
and (b), the term `stock' shall not include
nonqualified preferred stock.
``(2) Nonqualified preferred stock.--For purposes of
paragraph (1), the term `nonqualified preferred stock'
means preferred stock if--
``(A) the holder of such stock has the right
to require the issuer or a related person to
redeem or purchase the stock,
``(B) the issuer or a related person is
required to redeem or purchase such stock,
``(C) the issuer or a related person has the
right to redeem or purchase the stock and, as
of the issue date, it is more likely than not
that such right will be exercised, or
``(D) the dividend rate on such stock varies
in whole or in part (directly or indirectly)
with reference to interest rates, commodity
prices, or other similar indices.
Subparagraphs (A), (B), and (C) shall apply only if the
right or obligation referred to therein may be
exercised within the 20-year period beginning on the
issue date of such stock and if such right or
obligation is not pursuant to a contingency the
likelihood of which is remote.
``(3) Definitions.--For purposes of this subsection--
``(A) Preferred stock.--The term `preferred
stock' means stock which is limited and
preferred as to dividends and does not
participate (including through a conversion
privilege) in corporate growth to any
significant extent.
``(B) Related person.--A person shall be
treated as related to another person if they
bear a relationship to such other person
described in section 267(b) or 707(b).
``(4) Regulations.--The Secretary may prescribe such
regulations as may be necessary or appropriate to carry
out the purposes of this subsection and sections
354(a)(2)(C), 355(a)(3)(D), and 356(e). The Secretary
may also prescribe regulations, consistent with the
treatment under this subsection and such sections, for
the treatment of nonqualified preferred stock under
other provisions of this title.''
(b) Section 354.--Paragraph (2) of section 354(a) (relating
exchanges of stock and securities in certain reorganizations)
is amended by adding at the end the following new subparagraph:
``(C) Nonqualified preferred stock.--
``(i) In general.--Nonqualified
preferred stock (as defined in section
351(g)(2)) received in exchange for
stock other than nonqualified preferred
stock (as so defined) shall not be
treated as stock or securities.
``(ii) Recapitalizations of family-
owned corporations.--
``(I) In general.--Clause (i)
shall not apply in the case of
a recapitalization under
section 368(a)(1)(E) of a
family-owned corporation.
``(II) Family-owned
corporation.--For purposes of
this clause, the term `family-
owned corporation' means any
corporation which is described
in clause (i) of section
447(d)(2)(C) throughout the 8-
year period beginning on the
date which is 5 years before
the date of the
recapitalization. For purposes
of the preceding sentence,
stock shall not be treated as
owned by a family member during
any period that such family
member's holding period would
be reduced under the rules of
section 246(c)(4).
(c) Section 355.--Paragraph (3) of section 355(a) is amended
by adding at the end the following new subparagraph:
``(D) Nonqualified preferred stock.--
Nonqualified preferred stock (as defined in
section 351(g)(2)) received in a distribution
with respect to stock other than nonqualified
preferred stock (as so defined) shall not be
treated as stock or securities.''
(d) Section 356.--Section 356 is amended by redesignating
subsections (e) and (f) as subsections (f) and (g),
respectively, and by inserting after subsection (d) the
following new subsection:
``(e) Nonqualified Preferred Stock Treated as Other
Property.--For purposes of this section--
``(1) In general.--Except as provided in paragraph
(2), the term `other property' includes nonqualified
preferred stock (as defined in section 351(g)(2)).
``(2) Exception.--The term `other property' does not
include nonqualified preferred stock (as so defined) to
the extent that, under section 354 or 355, such
preferred stock would be permitted to be received
without the recognition of gain.''
(e) Conforming Amendments.--
(1) Subparagraph (B) of section 354(a)(2) is amended
by inserting ``(including nonqualified preferred stock,
as defined in section 351(g)(2))'' after ``stock''.
(2) Subparagraph (A) of section 354(a)(3) is amended
by inserting ``nonqualified preferred stock and'' after
``including''.
(3) Section 1036 is amended by redesignating
subsection (b) as subsection (c) and by inserting after
subsection (a) the following new subsection:
``(b) Nonqualified Preferred Stock Treated as Not Stock.--For
purposes of this section, nonqualified preferred stock (as
defined in section 351(g)(2)) shall be treated as not stock.''
(f) Effective Date.--
(1) In general.--The amendments made by this section
shall apply to transactions after December 7, 1995.
(2) Transitional rule.--The amendments made by this
section shall not apply to--
(A) any stock issued pursuant to a written
agreement which was (subject to customary
conditions) binding on December 7, 1995, and at
all times thereafter before the stock was
issued,
(B) any stock issued pursuant to an exchange
offer which was outstanding on such date, and
(C) any stock which was priced for purposes
of issuance on or before such date.
SEC. ____215. DENIAL OF INTEREST DEDUCTIONS ON CERTAIN DEBT
INSTRUMENTS.
(a) In General.--Section 163 (relating to deduction for
interest) is amended by redesignating subsection (k) as
subsection (l) and by inserting after subsection (j) the
following new subsection:
``(k) Disallowance of Deduction on Certain Debt Instruments
of Corporations.--
``(1) In general.--No deduction shall be allowed
under this chapter for any interest paid or accrued on
a disqualified debt instrument.
``(2) Disqualified debt instrument.--For purposes of
this subsection--
``(A) In general.--The term `disqualified
debt instrument' means any indebtedness of a
corporation--
``(i) which has a weighted average
maturity of more than 40 years, or
``(ii) any principal or interest on
which is payable in equity of the
issuer or a related party.
``(B) Exceptions.--Such term shall not
include--
``(i) a demand loan,
``(ii) indebtedness in connection
with a lease described in section
1055(c)(1) (relating to redeemable
ground rents), or
``(iii) any other indebtedness
specified by the Secretary.
``(3) Weighted average maturity.--For purposes of
paragraph (2)(A)(i), the weighted average maturity of
any indebtedness shall be determined in the same manner
as under section 1273, and in making such
determination--
``(A) any option or other right to extend,
renew, or relend the amount of any indebtedness
shall be treated as if exercised,
``(B) the holding of a put, call, or other
right to accelerate payment shall be
disregarded, and
``(C) 2 or more loans which are part of the
same transaction or series of transactions
shall be treated as 1 loan.
``(4) Special rules for amounts payable in equity.--
For purposes of paragraph (2)(A)(ii), principal or
interest on indebtedness shall be treated as payable in
equity of the issuer or a related party only if--
``(A) the principal or interest is required
to be paid or converted, or at the option of
the issuer or a related party is payable or
convertible, into such equity,
``(B) the amount of principal or interest is
required to be determined, or at the option of
the issuer or a related party is determined, by
reference to the value of such equity at the
time of payment of such principal or interest,
or
``(C) the indebtedness is part of an
arrangement which is reasonably expected to
result in a transaction described in
subparagraph (A) or (B).
The requirements of the preceding sentence shall be
treated as met with respect to any principal or
interest on indebtedness only if such requirement is
met with respect to a substantial amount of such
principal or interest.
``(5) Related party.--For purposes of this
subsection, a person is a related party with respect to
another person if such person bears a relationship to
such other person described in section 267(b) or
707(b).
``(6) Regulations.--The Secretary shall prescribe
such regulations as may be necessary or appropriate to
carry out the purposes of this subsection, including
regulations preventing avoidance of this subsection
through the use of an issuer other than a
corporation.''
(b) Classification of Certain Instruments as Debt or
Equity.--Section 385(c) (relating to effect of classification
by issuer) is amended by redesignating paragraph (3) as
paragraph (4) and by inserting after paragraph (2) the
following new paragraph:
``(3) Deemed classification of interest as stock.--
``(A) In general.--Except as otherwise
provided in regulations, for purposes of this
subsection, an applicable corporation shall be
treated as having characterized an interest in
the corporation as stock if--
``(i) it has a term of more than 20
years (determined under the principles
of subparagraphs (A), (B), and (C) of
section 163(k)(3)), and
``(ii) it is not shown as
indebtedness on an applicable balance
sheet of the issuer.
This paragraph shall not apply to an interest
described in section 163(k)(2)(B).
``(B) Effect of characterization.--Any
characterization of an interest as stock under
subparagraph (A)--
``(i) may not be changed, and
``(ii) except to the extent provided
in regulations, shall be treated as
having been made as of the time of
issuance.
``(C) Applicable corporation, etc.--For
purposes of this paragraph--
``(i) Applicable corporation.--The
term `applicable corporation' means,
with respect to any interest, a
corporation which, at any time during
the 1-year period beginning on the date
of issuance of the interest, is--
``(I) required to file annual
financial statements with the
Securities and Exchange
Commission, or
``(II) required to be
included in such financial
statements.
``(ii) Applicable balance sheet.--The
term `applicable balance sheet' means
any balance sheet which is required to
be filed with the Securities and
Exchange Commission by the issuer of an
interest or which is required to
include data with respect to such
issuer.
``(D) Interests issued to related parties.--
For purposes of subparagraph (A)(ii), if--
``(i) an interest in a corporation to
which subparagraph (A) applies is
issued to a person (other than a
corporation) which is related to the
issuer, and
``(ii) such interest is not shown on
an applicable balance sheet of the
issuer solely because the related
person is consolidated with such person
on such balance sheet,
such interest shall be treated as having been
characterized as stock if such related person
issues a related instrument not shown as
indebtedness on such balance sheet. For
purposes of the preceding sentence, a person is
a related person with respect to an issuer if
such person bears a relationship to the issuer
described in section 267(b) or 707(b).
``(E) Exception for certain lease
receivables.--This subsection shall not apply
to a nonrecourse interest if the issuer's
investment in a related lease receivable as
shown on the applicable balance sheet is
reduced by the amount of such interest.''
(c) Regulations.--Paragraph (4) of section 385(c), as
redesignated by subsection (b), is amended to read as follows:
``(4) Regulations.--The Secretary shall prescribe
such regulations as may be necessary or appropriate to
carry out the purposes of this subsection, including
such requirements for the providing of information to
the Secretary or such other persons as the Secretary
determines appropriate.''
(d) Effective Date.--
(1) In general.--The amendments made by this section
shall apply to interests in a corporation issued on or
after December 7, 1995.
(2) Transitional rule.--The amendments made by this
section shall not apply to--
(A) any interest issued pursuant to a
commitment which was binding on December 6,
1995, and at all times thereafter before the
interest was issued,
(B) any interest issued pursuant to an
exchange offer which was outstanding on such
date,
(C) any interest which was priced for
purposes of issuance on or before such date,
(D) interests issued pursuant to a
registration statement filed with the
Securities and Exchange Commission on or before
December 7, 1995 (other than a registration
statement which, under 17 CFR 230.415,
contemplated a delayed or continuous offering
of such interests), but only to the extent that
such interests are described in, and the amount
of such interests does not exceed in the
aggregate the amount stated in, such
registration statement as of such date,
(E) interests issued pursuant to a
registration statement which is filed with the
Securities and Exchange Commission on or before
December 7, 1995, and which, under 17 CFR
230.415, contemplated a delayed or continuous
offering of such interests if a prospectus
supplement (including a preliminary prospectus
supplement) to such registration statement was
filed under 17 CFR 230.424 on or before
December 7, 1995, but only to the extent that
such interests are described in, and the amount
of such interests does not exceed in the
aggregate the amount stated in, such prospectus
supplement as of such date (or, to the extent a
preliminary prospectus supplement as of such
date does not state a maximum amount to be
issued, the amount expected to be offered may
be established by other contemporaneous,
written evidence), and
(F) interests issued pursuant to a private
placement that contemplates resales of the
interests pursuant to 17 CFR 230.144A, but only
if, on or before December 7, 1995--
(i) the issuer had made a public
announcement of its intention to issue
the interests, and
(ii) an offering circular or
memorandum (including a preliminary
offering circular or memorandum) with
respect to the interests had been
distributed to prospective investors,
but only to the extent that such
interests are described in, and the
amount of such interests does not
exceed in the aggregate the amount
stated in, such offering circular or
memorandum as of such date.
An interest shall be treated as meeting the
requirements of subparagraph (A) if such interest is
issued, before the 30th day after the date of the
enactment of this Act, as part of an issue
substantially identical (other than yield) to an issue
which was publicly announced as having been sold on
December 7, 1995, but which was terminated on such
date.
SEC. ____216. DEFERRAL OF DEDUCTION FOR INTEREST ON CONVERTIBLE DEBT
UNTIL PAYMENT.
(a) In General.--Section 163, as amended by section ____, is
amended by redesignating subsection (l) as subsection (m) and
by inserting after subsection (k) the following new subsection:
``(l) Deferral of Interest Deduction on Convertible
Indebtedness.--
``(1) In general.--Interest on convertible
indebtedness of a corporation shall be deductible under
this chapter only in the taxable year in which paid.
For purposes of the preceding sentence, the principles
of section 163(i)(3)(B) shall apply.
``(2) Equity payments disregarded.--Except to the
extent provided in regulations, payments (including
through an arrangement described in paragraph (3)(C))
shall be disregarded for purposes of paragraph (1) if
such payments are in the form of--
``(A) equity of the issuer or a related
party, or
``(B) cash or other property the amount of
which is determined by reference to the value
of such equity.
``(3) Convertible indebtedness.--For purposes of this
subsection--
``(A) In general.--The term `convertible
indebtedness' means any indebtedness if--
``(i) the indebtedness is convertible
into equity of the issuer or a related
party,
``(ii) the amount principal or
interest on such indebtedness is
determined by reference to the value of
such equity, or
``(iii) the indebtedness is issued
with warrants or similar instruments as
part of an investment unit in which the
indebtedness may be used to satisfy the
exercise price of such warrants or
similar instruments.
``(B) Exceptions.--Such term shall not
include--
``(i) any indebtedness which would
(but for this subparagraph) be
convertible indebtedness solely because
a fixed payment of principal or
interest is, at the election of the
holder, payable in equity of the issuer
or a related party having a value equal
to the amount of such principal or
interest, or
``(ii) any other indebtedness
specified by the Secretary.
``(4) Related party.--For purposes of this
subsection, persons are related if they bear a
relationship specified in section 267(b) or section
707(b).
``(5) Regulations.--The Secretary shall prescribe
such regulations as may be necessary or appropriate to
carry out the purposes of this subsection, including
regulations preventing avoidance of this subsection
through the use of an issuer other than a
corporation.''
(b) Effective Dates.--
(1) In general.--Except as provided in paragraph (2),
the amendments made by this section shall apply to
indebtedness issued on or after December 7, 1995.
(2) Transitional rule.--The amendments made by this
section shall not apply to--
(A) any indebtedness issued pursuant to a
commitment which was binding on December 6,
1995, and at all times thereafter before the
indebtedness was issued,
(B) any indebtedness issued pursuant to an
exchange offer which was outstanding on such
date,
(C) any indebtedness which was priced for
purposes of issuance on or before such date,
(D) indebtedness issued pursuant to a
registration statement filed with the
Securities and Exchange Commission on or before
December 7, 1995 (other than a registration
statement which, under 17 CFR 230.415,
contemplated a delayed or continuous offering
of such indebtedness), but only to the extent
that such indebtedness is described in, and the
amount of such indebtedness does not exceed in
the aggregate the amount stated in, such
registration statement as of such date,
(E) indebtedness issued pursuant to a
registration statement which is filed with the
Securities and Exchange Commission on or before
December 7, 1995, and which, under 17 CFR
230.415, contemplated a delayed or continuous
offering of such indebtedness if a prospectus
supplement (including a preliminary prospectus
supplement) to such registration statement was
filed under 17 CFR 230.424 on or before
December 7, 1995, but only to the extent that
such indebtedness is described in, and the
amount of such indebtedness does not exceed in
the aggregate the amount stated in, such
prospectus supplement as of such date (or, to
the extent a preliminary prospectus supplement
as of such date does not state a maximum amount
to be issued, the amount expected to be offered
may be established by other contemporaneous,
written evidence), and
(F) indebtedness issued pursuant to a private
placement that contemplates resales of the
instruments pursuant to 17 CFR 230.144A, but
only if, on or before December 7, 1995--
(i) the issuer had made a public
announcement of its intention to issue
the indebtedness, and
(ii) an offering circular or
memorandum (including a preliminary
offering circular or memorandum) with
respect to the indebtedness had been
distributed to prospective investors,
but only to the extent that such
indebtedness is described in, and the
amount of such indebtedness does not
exceed in the aggregate the amount
stated in, such offering circular or
memorandum as of such date.
Indebtedness shall be treated as meeting the
requirements of subparagraph (A) if such indebtedness
is issued, before the 30th day after the date of the
enactment of this Act, as part of an issue
substantially identical (other than yield) to an issue
which was publicly announced as having been sold on
December 7, 1995, but which was terminated on such
date.
Subtitle C--Foreign Provisions
PART I--FOREIGN TRUSTS
SEC. ____301. IMPROVED INFORMATION REPORTING ON FOREIGN TRUSTS.
(a) In General.--Section 6048 of the Internal Revenue Code of
1986 (relating to returns as to certain foreign trusts) is
amended to read as follows:
``SEC. 6048. INFORMATION WITH RESPECT TO CERTAIN FOREIGN TRUSTS.
``(a) Notice of Certain Events.--
``(1) General rule.--On or before the 90th day (or
such later day as the Secretary may prescribe) after
any reportable event, the responsible party shall
provide written notice of such event to the Secretary
in accordance with paragraph (2).
``(2) Contents of notice.--The notice required by
paragraph (1) shall contain such information as the
Secretary may prescribe, including--
``(A) the amount of money or other property
(if any) transferred to the trust in connection
with the reportable event, and
``(B) the identity of the trust and of each
trustee and beneficiary (or class of
beneficiaries) of the trust.
``(3) Reportable event.--For purposes of this
subsection--
``(A) In general.--The term `reportable
event' means--
``(i) the creation of any foreign
trust by a United States person,
``(ii) the transfer of any money or
property (directly or indirectly) to a
foreign trust by a United States
person, including a transfer by reason
of death, and
``(iii) the death of a citizen or
resident of the United States if--
``(I) the decedent was
treated as the owner of any
portion of a foreign trust
under the rules of subpart E of
part I of subchapter J of
chapter 1, or
``(II) any portion of a
foreign trust was included in
the gross estate of the
decedent.
``(B) Exceptions.--
``(i) Fair market value sales.--
Subparagraph (A)(ii) shall not apply to
any transfer of property to a trust in
exchange for consideration of at least
the fair market value of the
transferred property. For purposes of
the preceding sentence, consideration
other than cash shall be taken into
account at its fair market value and
the rules of section 679(a)(3) shall
apply.
``(ii) Pension and charitable
trusts.--Subparagraph (A) shall not
apply with respect to a trust which
is--
``(I) described in section
404(a)(4) or 404A, or
``(II) determined by the
Secretary to be described in
section 501(c)(3).
``(4) Responsible party.--For purposes of this
subsection, the term `responsible party' means--
``(A) the grantor in the case of the creation
of an inter vivos trust,
``(B) the transferor in the case of a
reportable event described in paragraph
(3)(A)(ii) other than a transfer by reason of
death, and
``(C) the executor of the decedent's estate
in any other case.
``(b) United States Grantor of Foreign Trust.--
``(1) In general.--If, at any time during any taxable
year of a United States person, such person is treated
as the owner of any portion of a foreign trust under
the rules of subpart E of part I of subchapter J of
chapter 1, such person shall be responsible to ensure
that--
``(A) such trust makes a return for such year
which sets forth a full and complete accounting
of all trust activities and operations for the
year, the name of the United States agent for
such trust, and such other information as the
Secretary may prescribe, and
``(B) such trust furnishes such information
as the Secretary may prescribe to each United
States person (i) who is treated as the owner
of any portion of such trust or (ii) who
receives (directly or indirectly) any
distribution from the trust.
``(2) Trusts not having united states agent.--
``(A) In general.--If the rules of this
subsection apply to any foreign trust, the
determination of amounts required to be taken
into account with respect to such trust by a
United States person under the rules of subpart
E of part I of subchapter J of chapter 1 shall
be determined by the Secretary in the
Secretary's sole discretion from the
Secretary's own knowledge or from such
information as the Secretary may obtain through
testimony or otherwise.
``(B) United states agent required.--The
rules of this subsection shall apply to any
foreign trust to which paragraph (1) applies
unless such trust agrees (in such manner,
subject to such conditions, and at such time as
the Secretary shall prescribe) to authorize a
United States person to act as such trust's
limited agent solely for purposes of applying
sections 7602, 7603, and 7604 with respect to--
``(i) any request by the Secretary to
examine records or produce testimony
related to the proper treatment of
amounts required to be taken into
account under the rules referred to in
subparagraph (A), or
``(ii) any summons by the Secretary
for such records or testimony.
The appearance of persons or production of
records by reason of a United States person
being such an agent shall not subject such
persons or records to legal process for any
purpose other than determining the correct
treatment under this title of the amounts
required to be taken into account under the
rules referred to in subparagraph (A). A
foreign trust which appoints an agent described
in this subparagraph shall not be considered to
have an office or a permanent establishment in
the United States, or to be engaged in a trade
or business in the United States, solely
because of the activities of such agent
pursuant to this subsection.
``(C) Other rules to apply.--Rules similar to
the rules of paragraphs (2) and (4) of section
6038A(e) shall apply for purposes of this
paragraph.
``(c) Reporting by United States Beneficiaries of Foreign
Trusts.--
``(1) In general.--If any United States person
receives (directly or indirectly) during any taxable
year of such person any distribution from a foreign
trust, such person shall make a return with respect to
such trust for such year which includes--
``(A) the name of such trust,
``(B) the aggregate amount of the
distributions so received from such trust
during such taxable year, and
``(C) such other information as the Secretary
may prescribe.
``(2) Inclusion in income if records not provided.--
If adequate records are not provided to the Secretary
to determine the proper treatment of any distribution
from a foreign trust, such distribution shall be
treated as an accumulation distribution includible in
the gross income of the distributee under chapter 1. To
the extent provided in regulations, the preceding
sentence shall not apply if the foreign trust elects to
be subject to rules similar to the rules of subsection
(b)(2)(B).
``(d) Special Rules.--
``(1) Determination of whether united states person
receives distribution.--For purposes of this section,
in determining whether a United States person receives
a distribution from a foreign trust, the fact that a
portion of such trust is treated as owned by another
person under the rules of subpart E of part I of
subchapter J of chapter 1 shall be disregarded.
``(2) Domestic trusts with foreign activities.--To
the extent provided in regulations, a trust which is a
United States person shall be treated as a foreign
trust for purposes of this section and section 6677 if
such trust has substantial activities, or holds
substantial property, outside the United States.
``(3) Time and manner of filing information.--Any
notice or return required under this section shall be
made at such time and in such manner as the Secretary
shall prescribe.
``(4) Modification of return requirements.--The
Secretary is authorized to suspend or modify any
requirement of this section if the Secretary determines
that the United States has no significant tax interest
in obtaining the required information.''
(b) Increased Penalties.--Section 6677 of such Code (relating
to failure to file information returns with respect to certain
foreign trusts) is amended to read as follows:
``SEC. 6677. FAILURE TO FILE INFORMATION WITH RESPECT TO CERTAIN
FOREIGN TRUSTS.
``(a) Civil Penalty.--In addition to any criminal penalty
provided by law, if any notice or return required to be filed
by section 6048--
``(1) is not filed on or before the time provided in
such section, or
``(2) does not include all the information required
pursuant to such section or includes incorrect
information,
the person required to file such notice or return shall pay a
penalty equal to 35 percent of the gross reportable amount. If
any failure described in the preceding sentence continues for
more than 90 days after the day on which the Secretary mails
notice of such failure to the person required to pay such
penalty, such person shall pay a penalty (in addition to the
amount determined under the preceding sentence) of $10,000 for
each 30-day period (or fraction thereof) during which such
failure continues after the expiration of such 90-day period.
``(b) Special Rules for Returns Under Section 6048(b).--In
the case of a return required under section 6048(b)--
``(1) the United States person referred to in such
section shall be liable for the penalty imposed by
subsection (a), and
``(2) subsection (a) shall be applied by substituting
`5 percent' for `35 percent'.
``(c) Gross Reportable Amount.--For purposes of subsection
(a), the term `gross reportable amount' means--
``(1) the gross value of the property involved in the
event (determined as of the date of the event) in the
case of a failure relating to section 6048(a),
``(2) the gross value of the portion of the trust's
assets at the close of the year treated as owned by the
United States person in the case of a failure relating
to section 6048(b)(1), and
``(3) the gross amount of the distributions in the
case of a failure relating to section 6048(c).
``(d) Reasonable Cause Exception.--No penalty shall be
imposed by this section on any failure which is shown to be due
to reasonable cause and not due to willful neglect. The fact
that a foreign jurisdiction would impose a civil or criminal
penalty on the taxpayer (or any other person) for disclosing
the required information is not reasonable cause.
``(e) Deficiency Procedures Not To Apply.--Subchapter B of
chapter 63 (relating to deficiency procedures for income,
estate, gift, and certain excise taxes) shall not apply in
respect of the assessment or collection of any penalty imposed
by subsection (a).''
(c) Conforming Amendments.--
(1) Paragraph (2) of section 6724(d) of such Code is
amended by striking ``or'' at the end of subparagraph
(S), by striking the period at the end of subparagraph
(T) and inserting ``, or'', and by inserting after
subparagraph (T) the following new subparagraph:
``(U) section 6048(b)(1)(B) (relating to
foreign trust reporting requirements).''
(2) The table of sections for subpart B of part III
of subchapter A of chapter 61 is of such Code amended
by striking the item relating to section 6048 and
inserting the following new item:
``Sec. 6048. Information with respect to certain foreign
trusts.''
(3) The table of sections for part I of subchapter B
of chapter 68 of such Code is amended by striking the
item relating to section 6677 and inserting the
following new item:
``Sec. 6677. Failure to file information with respect to certain
foreign trusts.''
(d) Effective Dates.--
(1) Reportable events.--To the extent related to
subsection (a) of section 6048 of the Internal Revenue
Code of 1986, as amended by this section, the
amendments made by this section shall apply to
reportable events (as defined in such section 6048)
occurring after the date of the enactment of this Act.
(2) Grantor trust reporting.--To the extent related
to subsection (b) of such section 6048, the amendments
made by this section shall apply to taxable years of
United States persons beginning after the date of the
enactment of this Act.
(3) Reporting by united states beneficiaries.--To the
extent related to subsection (c) of such section 6048,
the amendments made by this section shall apply to
distributions received after the date of the enactment
of this Act.
SEC. ____302. MODIFICATIONS OF RULES RELATING TO FOREIGN TRUSTS HAVING
ONE OR MORE UNITED STATES BENEFICIARIES.
(a) Treatment of Trust Obligations, Etc.--
(1) Paragraph (2) of section 679(a) of the Internal
Revenue Code of 1986 is amended by striking
subparagraph (B) and inserting the following:
``(B) Transfers at fair market value.--To any
transfer of property to a trust in exchange for
consideration of at least the fair market value
of the transferred property. For purposes of
the preceding sentence, consideration other
than cash shall be taken into account at its
fair market value.''
(2) Subsection (a) of section 679 of such Code
(relating to foreign trusts having one or more United
States beneficiaries) is amended by adding at the end
the following new paragraph:
``(3) Certain obligations not taken into account
under fair market value exception.--
``(A) In general.--In determining whether
paragraph (2)(B) applies to any transfer by a
person described in clause (ii) or (iii) of
subparagraph (C), there shall not be taken into
account--
``(i) any obligation of a person
described in subparagraph (C), and
``(ii) to the extent provided in
regulations, any obligation which is
guaranteed by a person described in
subparagraph (C).
``(B) Treatment of principal payments on
obligation.--Principal payments by the trust on
any obligation referred to in subparagraph (A)
shall be taken into account on and after the
date of the payment in determining the portion
of the trust attributable to the property
transferred.
``(C) Persons described.--The persons
described in this subparagraph are--
``(i) the trust,
``(ii) any grantor or beneficiary of
the trust, and
``(iii) any person who is related
(within the meaning of section
643(i)(3)) to any grantor or
beneficiary of the trust.''
(b) Exemption of Transfers to Charitable Trusts.--Subsection
(a) of section 679 of such Code is amended by striking
``section 404(a)(4) or 404A'' and inserting ``section
6048(a)(3)(B)(ii)''.
(c) Other Modifications.--Subsection (a) of section 679 of
such Code is amended by adding at the end the following new
paragraphs:
``(4) Special rules applicable to foreign grantor who
later becomes a united states person.--
``(A) In general.--If a nonresident alien
individual has a residency starting date within
5 years after directly or indirectly
transferring property to a foreign trust, this
section and section 6048 shall be applied as if
such individual transferred to such trust on
the residency starting date an amount equal to
the portion of such trust attributable to the
property transferred by such individual to such
trust in such transfer.
``(B) Treatment of undistributed income.--For
purposes of this section, undistributed net
income for periods before such individual's
residency starting date shall be taken into
account in determining the portion of the trust
which is attributable to property transferred
by such individual to such trust but shall not
otherwise be taken into account.
``(C) Residency starting date.--For purposes
of this paragraph, an individual's residency
starting date is the residency starting date
determined under section 7701(b)(2)(A).
``(5) Outbound trust migrations.--If--
``(A) an individual who is a citizen or
resident of the United States transferred
property to a trust which was not a foreign
trust, and
``(B) such trust becomes a foreign trust
while such individual is alive,
then this section and section 6048 shall be applied as
if such individual transferred to such trust on the
date such trust becomes a foreign trust an amount equal
to the portion of such trust attributable to the
property previously transferred by such individual to
such trust. A rule similar to the rule of paragraph
(4)(B) shall apply for purposes of this paragraph.''
(d) Modifications Relating to Whether Trust Has United States
Beneficiaries.--Subsection (c) of section 679 of such Code is
amended by adding at the end the following new paragraphs:
``(3) Certain united states beneficiaries
disregarded.--A beneficiary shall not be treated as a
United States person in applying this section with
respect to any transfer of property to foreign trust if
such beneficiary first became a United States person
more than 5 years after the date of such transfer.
``(4) Treatment of former united states persons.--To
the extent provided by the Secretary, for purposes of
this subsection, the term `United States person'
includes any person who was a United States person at
any time during the existence of the trust.''
(e) Technical Amendment.--Subparagraph (A) of section
679(c)(2) is amended to read as follows:
``(A) in the case of a foreign corporation,
such corporation is a controlled foreign
corporation (as defined in section 957(a)),''.
(f) Regulations.--Section 679 is amended by adding at the end
the following new subsection:
``(d) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out the
purposes of this section.''
(g) Effective Date.--The amendments made by this section
shall apply to transfers of property after February 6, 1995.
SEC. ____303. FOREIGN PERSONS NOT TO BE TREATED AS OWNERS UNDER GRANTOR
TRUST RULES.
(a) General Rule.--
(1) Subsection (f) of section 672 of the Internal
Revenue Code of 1986 (relating to special rule where
grantor is foreign person) is amended to read as
follows:
``(f) Subpart Not To Result in Foreign Ownership.--
``(1) In general.--Notwithstanding any other
provision of this subpart, this subpart shall apply
only to the extent such application results in an
amount being currently taken into account (directly or
through 1 or more entities) under this chapter in
computing the income of a citizen or resident of the
United States or a domestic corporation.
``(2) Exceptions.--
``(A) Certain revocable and ir-revocable
trusts.--
``(i) In general.--Except as provided
in clause (ii), paragraph (1) shall not
apply to any trust if--
``(I) the power to revest
absolutely in the grantor title
to the trust property is
exercisable solely by the
grantor without the approval or
consent of any other person or
with the consent of a related
or subordinate party who is
subservient to the grantor, or
``(II) the only amounts
distributable from such trust
(whether income or corpus)
during the lifetime of the
grantor are amounts
distributable to the grantor or
the spouse of the grantor.
``(ii) Exception.--Clause (i) shall
not apply to any trust which has a
beneficiary who is a United States
person to the extent such beneficiary
has made transfers of property by gift
(directly or indirectly) to a foreign
person who is the grantor of such
trust. For purposes of the preceding
sentence, any gift shall not be taken
into account to the extent such gift is
excluded from taxable gifts under
section 2503(b).
``(B) Compensatory trusts.--Except as
provided in regulations, paragraph (1) shall
not apply to any portion of a trust
distributions from which are taxable as
compensation for services rendered.
``(3) Special rules.--Except as otherwise provided in
regulations prescribed by the Secretary--
``(A) a controlled foreign corporation (as
defined in section 957) shall be treated as a
domestic corporation for purposes of paragraph
(1), and
``(B) paragraph (1) shall not apply for
purposes of applying part III of subchapter G
(relating to foreign personal holding
companies) and part VI of subchapter P
(relating to treatment of certain passive
foreign investment companies).
``(4) Recharacterization of purported gifts.--In the
case of any transfer directly or indirectly from a
partnership or foreign corporation which the transferee
treats as a gift or bequest, the Secretary may
recharacterize such transfer in such circumstances as
the Secretary determines to be appropriate to prevent
the avoidance of the purposes of this subsection.
``(5) Regulations.--The Secretary shall prescribe
such regulations as may be necessary or appropriate to
carry out the purposes of this subsection, including
regulations providing that paragraph (1) shall not
apply in appropriate cases.''
(2) The last sentence of subsection (c) of section
672 of such Code is amended by inserting ``subsection
(f) and'' before ``sections 674''.
(b) Credit for Certain Taxes.--Paragraph (2) of section
665(d) of such Code is amended by adding at the end the
following new sentence: ``Under rules or regulations prescribed
by the Secretary, in the case of any foreign trust of which the
settlor or another person would be treated as owner of any
portion of the trust under subpart E but for section 672(f),
the term `taxes imposed on the trust' includes the allocable
amount of any income, war profits, and excess profits taxes
imposed by any foreign country or possession of the United
States on the settlor or such other person in respect of trust
gross income.''
(c) Distributions by Certain Foreign Trusts Through
Nominees.--
(1) Section 643 of such Code is amended by adding at
the end the following new subsection:
``(h) Distributions by Certain Foreign Trusts Through
Nominees.--For purposes of this part, any amount paid to a
United States person which is derived directly or indirectly
from a foreign trust of which the payor is not the grantor
shall be deemed in the year of payment to have been directly
paid by the foreign trust to such United States person.''
(2) Section 665 of such Code is amended by striking
subsection (c).
(d) Effective Date.--
(1) In general.--Except as provided by paragraph (2),
the amendments made by this section shall take effect
on the date of the enactment of this Act.
(2) Exception for certain trusts.--The amendments
made by this section shall not apply to any trust--
(A) which is treated as owned by the grantor
or another person under section 676 or 677
(other than subsection (a)(3) thereof) of the
Internal Revenue Code of 1986, and
(B) which is in existence on September 19,
1995.
The preceding sentence shall not apply to the portion
of any such trust attributable to any transfer to such
trust after September 19, 1995.
(e) Transitional Rule.--If--
(1) by reason of the amendments made by this section,
any person other than a United States person ceases to
be treated as the owner of a portion of a domestic
trust, and
(2) before January 1, 1997, such trust becomes a
foreign trust, or the assets of such trust are
transferred to a foreign trust,
no tax shall be imposed by section 1491 of the Internal Revenue
Code of 1986 by reason of such trust becoming a foreign trust
or the assets of such trust being transferred to a foreign
trust.
SEC. ____304. INFORMATION REPORTING REGARDING FOREIGN GIFTS.
(a) In General.--Subpart A of part III of subchapter A of
chapter 61 of the Internal Revenue Code of 1986 is amended by
inserting after section 6039E the following new section:
``SEC. 6039F. NOTICE OF GIFTS RECEIVED FROM FOREIGN PERSONS.
``(a) In General.--If the value of the aggregate foreign
gifts received by a United States person (other than an
organization described in section 501(c) and exempt from tax
under section 501(a)) during any taxable year exceeds $10,000,
such United States person shall furnish (at such time and in
such manner as the Secretary shall prescribe) such information
as the Secretary may prescribe regarding each foreign gift
received during such year.
``(b) Foreign Gift.--For purposes of this section, the term
`foreign gift' means any amount received from a person other
than a United States person which the recipient treats as a
gift or bequest. Such term shall not include any qualified
transfer (within the meaning of section 2503(e)(2)).
``(c) Penalty for Failure To File Information.--
``(1) In general.--If a United States person fails to
furnish the information required by subsection (a) with
respect to any foreign gift within the time prescribed
therefor (including extensions)--
``(A) the tax consequences of the receipt of
such gift shall be determined by the Secretary
in the Secretary's sole discretion from the
Secretary's own knowledge or from such
information as the Secretary may obtain through
testimony or otherwise, and
``(B) such United States person shall pay
(upon notice and demand by the Secretary and in
the same manner as tax) an amount equal to 5
percent of the amount of such foreign gift for
each month for which the failure continues (not
to exceed 25 percent of such amount in the
aggregate).
``(2) Reasonable cause exception.-- Paragraph (1)
shall not apply to any failure to report a foreign gift
if the United States person shows that the failure is
due to reasonable cause and not due to willful neglect.
``(d) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out the
purposes of this section.''
(b) Clerical Amendment.--The table of sections for such
subpart is amended by inserting after the item relating to
section 6039E the following new item:
``Sec. 6039F. Notice of large gifts received from foreign
persons.''
(c) Effective Date.--The amendments made by this section
shall apply to amounts received after the date of the enactment
of this Act in taxable years ending after such date.
SEC. ____305. MODIFICATION OF RULES RELATING TO FOREIGN TRUSTS WHICH
ARE NOT GRANTOR TRUSTS.
(a) Modification of Interest Charge on Accumulation
Distributions.--Subsection (a) of section 668 of the Internal
Revenue Code of 1986 (relating to interest charge on
accumulation distributions from foreign trusts) is amended to
read as follows:
``(a) General Rule.--For purposes of the tax determined under
section 667(a)--
``(1) Interest determined using underpayment rates.--
The interest charge determined under this section with
respect to any distribution is the amount of interest
which would be determined on the partial tax computed
under section 667(b) for the period described in
paragraph (2) using the rates and the method under
section 6621 applicable to underpayments of tax.
``(2) Period.--For purposes of paragraph (1), the
period described in this paragraph is the period which
begins on the date which is the applicable number of
years before the date of the distribution and which
ends on the date of the distribution.
``(3) Applicable number of years.--For purposes of
paragraph (2)--
``(A) In general.--The applicable number of
years with respect to a distribution is the
number determined by dividing--
``(i) the sum of the products
described in subparagraph (B) with
respect to each undistributed income
year, by
``(ii) the aggregate undistributed
net income.
The quotient determined under the preceding
sentence shall be rounded under procedures
prescribed by the Secretary.
``(B) Product described.--For purposes of
subparagraph (A), the product described in this
subparagraph with respect to any undistributed
income year is the product of--
``(i) the undistributed net income
for such year, and
``(ii) the sum of the number of
taxable years between such year and the
taxable year of the distribution
(counting in each case the
undistributed income year but not
counting the taxable year of the
distribution).
``(4) Undistributed income year.--For purposes of
this subsection, the term `undistributed income year'
means any prior taxable year of the trust for which
there is undistributed net income, other than a taxable
year during all of which the beneficiary receiving the
distribution was not a citizen or resident of the
United States.
``(5) Determination of undistributed net income.--
Notwithstanding section 666, for purposes of this
subsection, an accumulation distribution from the trust
shall be treated as reducing proportionately the
undistributed net income for prior taxable years.
``(6) Periods before 1996.--Interest for the portion
of the period described in paragraph (2) which occurs
before January 1, 1996, shall be determined--
``(A) by using an interest rate of 6 percent,
and
``(B) without compounding until January 1,
1996.''
(b) Abusive Transactions.--Section 643(a) of such Code is
amended by inserting after paragraph (6) the following new
paragraph:
``(7) Abusive transactions.--The Secretary shall
prescribe such regulations as may be necessary or
appropriate to carry out the purposes of this part,
including regulations to prevent avoidance of such
purposes.''
(c) Treatment of Use of Trust Property.--
(1) In general.--Section 643 of such Code (relating
to definitions applicable to subparts A, B, C, and D)
is amended by adding at the end the following new
subsection:
``(i) Use of Foreign Trust Property.--For purposes of
subparts B, C, and D--
``(1) General rule.--If a foreign trust makes a loan
of cash or marketable securities directly or indirectly
to--
``(A) any grantor or beneficiary of such
trust who is a United States person, or
``(B) any United States person not described
in subparagraph (A) who is related to such
grantor or beneficiary,
the amount of such loan shall be treated as a
distribution by such trust to such grantor or
beneficiary (as the case may be).
``(2) Use of other property.--Except as provided in
regulations prescribed by the Secretary, any direct or
indirect use of trust property (other than cash or
marketable securities) by a person referred to in
subparagraph (A) or (B) of paragraph (1) shall be
treated as a distribution to the grantor or beneficiary
(as the case may be) equal to the fair market value of
the use of such property. The Secretary may prescribe
regulations treating a loan guarantee by the trust as a
use of trust property equal to the value of the
guarantee.
``(3) Definitions and special rules.--For purposes of
this subsection--
``(A) Cash.--The term `cash' includes foreign
currencies and cash equivalents.
``(B) Related person.--
``(i) In general.--A person is
related to another person if the
relationship between such persons would
result in a disallowance of losses
under section 267 or 707(b). In
applying section 267 for purposes of
the preceding sentence, section
267(c)(4) shall be applied as if the
family of an individual includes the
spouses of the members of the family.
``(ii) Allocation of use.--If any
person described in paragraph (1)(B) is
related to more than one person, the
grantor or beneficiary to whom the
treatment under this subsection applies
shall be determined under regulations
prescribed by the Secretary.
``(C) Exclusion of tax-exempts.--The term
`United States person' does not include any
entity exempt from tax under this chapter.
``(D) Trust not treated as simple trust.--Any
trust which is treated under this subsection as
making a distribution shall be treated as not
described in section 651.
``(4) Subsequent transactions regarding loan
principal.--If any loan is taken into account under
paragraph (1), any subsequent transaction between the
trust and the original borrower regarding the principal
of the loan (by way of complete or partial repayment,
satisfaction, cancellation, discharge, or otherwise)
shall be disregarded for purposes of this title.''
(2) Technical amendment.--Paragraph (8) of section
7872(f) is amended by inserting ``, 643(i),'' before
``or 1274'' each place it appears.
(d) Effective Dates.--
(1) Interest charge.--The amendment made by
subsection (a) shall apply to distributions after the
date of the enactment of this Act.
(2) Abusive transactions.--The amendment made by
subsection (b) shall take effect on the date of the
enactment of this Act.
(3) Use of trust property.--The amendment made by
subsection (c) shall apply to--
(A) loans of cash or marketable securities
after September 19, 1995, and
(B) uses of other trust property after
December 31, 1995.
SEC. ____306. RESIDENCE OF ESTATES AND TRUSTS, ETC.
(a) Treatment as United States Person.--
(1) In general.--Paragraph (30) of section 7701(a) of
the Internal Revenue Code of 1986 is amended by
striking subparagraph (D) and by inserting after
subparagraph (C) the following:
``(D) any estate or trust if--
``(i) a court within the United
States is able to exercise primary
supervision over the administration of
the estate or trust, and
``(ii) in the case of a trust, one or
more United States fiduciaries have the
authority to control all substantial
decisions of the trust.''
(2) Conforming amendment.--Paragraph (31) of section
7701(a) of such Code is amended to read as follows:
``(31) Foreign estate or trust.--The term `foreign
estate' or `foreign trust' means any estate or trust
other than an estate or trust described in section
7701(a)(30)(D).''
(3) Effective date.--The amendments made by this
subsection shall apply--
(A) to taxable years beginning after December
31, 1996, or
(B) at the election of the trustee of a
trust, to taxable years ending after the date
of the enactment of this Act.
Such an election, once made, shall be irrevocable.
(b) Domestic Trusts Which Become Foreign Trusts.--
(1) In general.--Section 1491 of such Code (relating
to imposition of tax on transfers to avoid income tax)
is amended by adding at the end the following new flush
sentence:
``If a trust which is not a foreign trust becomes a foreign
trust, such trust shall be treated for purposes of this section
as having transferred, immediately before becoming a foreign
trust, all of its assets to a foreign trust.''
(2) Penalty.--Section 1494 of the Internal Revenue
Code of 1986 is amended by adding at the end the
following new subsection:
``(c) Penalty.--In the case of any failure to file a return
required by the Secretary with respect to any transfer
described in section 1491, the person required to file such
return shall be liable for the penalties provided in section
6677 in the same manner as if such failure were a failure to
file a return under section 6048(a).''
(3) Effective date.--The amendments made by this
subsection shall take effect on the date of the
enactment of this Act.
PART II--OTHER FOREIGN PROVISIONS
SEC. ____311. DEFINITION OF FOREIGN PERSONAL HOLDING COMPANY INCOME.
(a) Income From Notional Principal Contracts.--
(1) In general.--Paragraph (1) of section 954(c)
(defining foreign personal holding company income) is
amended by adding at the end the following new
subparagraph:
``(F) Income from notional principal
contracts.--Net income from notional principal
contracts. Any item of income, gain, deduction,
or loss from a notional principal contract
entered into for purposes of hedging any item
described in subparagraph (B), (C), (D), or (E)
shall not be taken into account for purposes of
this subparagraph but shall be taken into
account under such other subparagraph.''
(2) Exception for dealers.--Paragraph (2) of section
954(c) is amended by adding at the end the following
new subparagraph:
``(C) Exception for dealers.--Except as
provided by regulations, in the case of a
regular dealer in property, forward contracts,
option contracts, or similar financial
instruments (including notional principal
contracts), there shall not be taken into
account in computing foreign personal holding
income any item of income, gain, deduction, or
loss from any transaction (including hedging
transactions) entered into in the ordinary
course of such dealer's trade or business as
such a dealer.''
(3) Conforming amendment.--Subparagraph (B) of
section 954(c)(1) is amended--
(A) by striking the second sentence, and
(B) by striking ``also'' in the last
sentence.
(b) Payments in Lieu of Dividends.--Paragraph (1) of section
954(c), as amended by subsection (a), is amended by adding at
the end the following new subparagraph:
``(G) Payments in lieu of dividends.--
Payments in lieu of dividends which are made
pursuant to an agreement to which section 1058
applies.''
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 1995.
SEC. ____312. TREATMENT OF FOREIGN OIL AND GAS EXTRACTION INCOME.
(a) Disallowance of Foreign Tax Credit.--Section 907(a) is
amended to read as follows:
``(a) Denial of Foreign Tax Credit for Extraction Income.--
``(1) In general.--Notwithstanding any other
provision of this part--
``(A) no credit shall be allowed under
section 901(a) for any income, war profits, or
excess profits taxes paid or accrued (or deemed
paid under section 902 or 960) to any country
which are attributable to foreign oil and gas
extraction income, and
``(B) subsections (a), (b), and (c) of
section 904 and sections 902 and 960 shall be
applied separately with respect to foreign oil
and gas extraction income.
``(2) Taxes allowed as deduction, etc.--Sections 78
and 275 shall not apply to any tax which is not
allowable as a credit under section 901(a) by reason of
this subsection.''
(b) Elimination of Deferral.--Section 954(g) is amended by
adding at the end the following new paragraph:
``(3) No exceptions for extraction income.--
Notwithstanding paragraphs (1) and (2), foreign base
company oil related income shall include all foreign
oil and gas extraction income (as defined in section
907(c)(1)) for the taxable year.''
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 1995.
The amendments made by this section shall apply notwithstanding
any treaty obligation of the United States.
SEC. ____313. LIMITATION ON EXCLUSION OF EARNED INCOME OF CITIZENS OR
RESIDENTS OF THE UNITED STATES LIVING ABROAD.
(a) In General.--Section 911 (relating to exclusion of earned
income of citizens or residents of the United States living
abroad) is amended by redesignating subsection (f) as
subsection (g) and by inserting after subsection (e) the
following new subsection:
``(f) Exclusion To Be Applied at Lowest Rates of Tax.--If
this section applies to a taxpayer for any taxable year, the
tax imposed this chapter for such taxable year shall be equal
to the greater of--
``(1) such tax determined without regard to this
subsection, or
``(2) the excess of--
``(A) such tax determined without regard to
this section, over
``(B) a tax determined under section 1 on an
amount of taxable income equal to the amount of
the exclusion under subsection (a).''
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 1995.
Subtitle D--Accounting Provisions
SEC. ____401. REPEAL OF BAD DEBT RESERVE METHOD FOR THRIFT SAVINGS
ASSOCIATIONS.
(a) In General.--Section 593 (relating to reserves for losses
on loans) is hereby repealed.
(b) Conforming Amendments.--
(1) Subsection (d) of section 50 is amended by adding
at the end the following new sentence:
``Paragraphs (1)(A), (2)(A), and (4) of section 46(e) referred
to in paragraph (1) of this subsection shall not apply to any
taxable year beginning after December 31, 1995.''
(2) Subsection (e) of section 52 is amended by
striking paragraph (1) and by redesignating paragraphs
(2) and (3) as paragraphs (1) and (2), respectively.
(3) Subsection (a) of section 57 is amended by
striking paragraph (4).
(4) Section 246 is amended by striking subsection
(f).
(5) Clause (i) of section 291(e)(1)(B) is amended by
striking ``or to which section 593 applies''.
(6) Subparagraph (A) of section 585(a)(2) is amended
by striking ``other than an organization to which
section 593 applies''.
(7) Sections 595 and 596 are hereby repealed.
(8) Subsection (a) of section 860E is amended--
(A) by striking ``Except as provided in
paragraph (2), the'' in paragraph (1) and
inserting ``The'',
(B) by striking paragraphs (2) and (4) and
redesignating paragraphs (3) and (5) as
paragraphs (2) and (3), respectively, and
(C) by striking in paragraph (2) (as so
redesignated) all that follows ``subsection''
and inserting a period.
(9) Paragraph (3) of section 992(d) is amended by
striking ``or 593''.
(10) Section 1038 is amended by striking subsection
(f).
(11) Clause (ii) of section 1042(c)(4)(B) is amended
by striking ``or 593''.
(12) Subsection (c) of section 1277 is amended by
striking ``or to which section 593 applies''.
(13) Subparagraph (B) of section 1361(b)(2) is
amended by striking ``or to which section 593
applies''.
(14) The table of sections for part II of subchapter
H of chapter 1 is amended by striking the items
relating to sections 593, 595, and 596.
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2),
the amendments made by this section shall apply to
taxable years beginning after December 31, 1995.
(2) Repeal of section 595.--The repeal of section 595
under subsection (b)(7) shall apply to property
acquired in taxable years beginning after December 31,
1995.
(d) 6-Year Spread of Adjustments.--
(1) In general.--In the case of any taxpayer who is
required by reason of the amendments made by this
section to change its method of computing reserves for
bad debts--
(A) such change shall be treated as a change
in a method of accounting,
(B) such change shall be treated as initiated
by the taxpayer and as having been made with
the consent of the Secretary, and
(C) the net amount of the adjustments
required to be taken into account by the
taxpayer under section 481(a)--
(i) shall be determined by taking
into account only applicable excess
reserves, and
(ii) as so determined, shall be taken
into account ratably over the 6-taxable
year period beginning with the first
taxable year beginning after December
31, 1995.
(2) Applicable excess reserves.--
(A) In general.--For purposes of paragraph
(1), the term `applicable excess reserves'
means the excess (if any) of--
(i) the balance of the reserves
described in section 593(c)(1) of such
Code (as in effect on the day before
the date of the enactment of this Act)
as of the close of the taxpayer's last
taxable year beginning before January
1, 1996, over
(ii) the lesser of--
(I) the balance of such
reserves as of the close of the
taxpayer's last taxable year
beginning before January 1,
1988, or
(II) the balance of the
reserves described in subclause
(I), reduce by an amount
determined in the same manner
as under section
585(b)(2)(B)(ii) on the basis
of the taxable years described
in clause (i) and this clause.
(B) Special rule for thrifts which become
small banks.--In the case of a bank (as defined
in section 581 of such Code) which is not a
large bank (as defined in section 585(c)(2) of
such Code) for its first taxable year beginning
after December 31, 1995--
(i) the balance taken into account
under subparagraph (A)(ii) shall not be
less than the amount which would be the
balance of such reserve as of the close
of its last taxable year beginning
before January 1, 1996, if the
additions to such reserve for all
taxable years had been determined under
section 585(b)(2)(A), and
(ii) the opening balance of the
reserve for bad debts as of the
beginning of such first taxable year
shall be the balance taken into account
under subparagraph (A)(ii) (determined
after the application of clause (i) of
this subparagraph).
The preceding sentence shall not apply for
purposes of paragraphs (5), (6), and (7).
(3) Recapture of pre-1988 reserves where taxpayer
ceases to be bank.--If during any taxable year
beginning after December 31, 1995, a taxpayer to which
paragraph (1) applied is not a bank (as defined in
section 581), paragraph (1) shall apply to the reserves
described in subparagraph (A)(ii) except that such
reserves shall be taken into account ratably over the
6-taxable year period beginning with such taxable year.
(4) Suspension of recapture if residential loan
requirement met.--
(A) In general.--In the case of a bank which
meets the residential loan requirement of
subparagraph (B) for a taxable year beginning
after December 31, 1995, and before January 1,
1998--
(i) no adjustment shall be taken into
account under paragraph (1) for such
taxable year, and
(ii) such taxable year shall be
disregarded in determining--
(I) whether any other taxable
year is a taxable year for
which an adjustment is required
to be taken into account under
paragraph (1), and
(II) the amount of such
adjustment.
(B) Residential loan requirement.--A taxpayer
meets the residential loan requirement of this
subparagraph for any taxable year if the
principal amount of the residential loans made
by the taxpayer during such year is not less
than the base amount for such year.
(C) Residential loan.--For purposes of this
paragraph, the term ``residential loan'' means
any loan described in clause (v) of section
7701(a)(19)(C) of such Code but only if such
loan is incurred in acquiring, constructing, or
improving the property described in such
clause.
(D) Base amount.--For purposes of
subparagraph (B), the base amount is the
average of the principal amounts of the
residential loans made by the taxpayer during
the 6 most recent taxable years beginning
before January 1, 1996. At the election of the
taxpayer who made such loans during each of
such 6 taxable years, the preceding sentence
shall be applied without regard to the taxable
year in which such principal amount was the
highest and the taxable year in such principal
amount was the lowest. Such an election may be
made only for the first taxable year beginning
after December 31, 1995, and, if made for such
taxable year, shall apply to the succeeding
taxable year unless revoked with the consent of
the Secretary of the Treasury or his delegate.
(E) Controlled groups.--In the case of a
taxpayer which is a member of any controlled
group of corporations described in section
1563(a)(1) of such Code, subparagraph (B) shall
be applied with respect to such group.
(5) Continued application of fresh start under
section 585 transitional rules.--In the case of a
taxpayer to which paragraph (1) applied and which was
not a large bank (as defined in section 585(c)(2) of
such Code) for its first taxable year beginning after
December 31, 1995:
(A) In general.--For purposes of determining
the net amount of adjustments referred to in
section 585(c)(3)(A)(iii) of such Code, there
shall be taken into account only the excess of
the reserve for bad debts as of the close of
the last taxable year before the
disqualification year over the balance taken
into account by such taxpayer under paragraph
(2)(A)(ii) of this subsection.
(B) Treatment under elective cut-off
method.--For purposes of applying section
585(c)(4) of such Code--
(i) the balance of the reserve taken
into account under subparagraph (B)
thereof shall be reduced by the balance
taken into account by such taxpayer
under paragraph (2)(A)(ii) of this
subsection, and
(ii) no amount shall be includible in
gross income by reason of such
reduction.
(6) Continued application of section 593(e).--
Notwithstanding the amendments made by this section, in
the case of a taxpayer to which paragraph (1) of this
subsection applies, section 593(e) of such Code (as in
effect on the day before the date of the enactment of
this Act) shall continue to apply to such taxpayer as
if such taxpayer were a domestic building and loan
association but the amount of the reserves taken into
account under subparagraphs (B) and (C) of section
593(e)(1) (as so in effect) shall be the balance taken
into account by such taxpayer under paragraph
(2)(A)(ii) of this subsection.
(7) Certain items included as section 381(c) items.--
The balance of the applicable excess reserves, and the
balance taken into account by a taxpayer under
paragraph (2)(A)(ii) of this subsection, shall be
treated as items described in section 381(c) of such
Code.
(8) Conversions to credit unions.--In the case of a
taxpayer to which paragraph (1) applied which becomes a
credit union described in section 501(c)(14)(A)--
(A) any amount required to be included in the
gross income of the credit union by reason of
this subsection shall be treated as derived
from an unrelated trade or business (as defined
in section 513), and
(B) for purposes of paragraph (3), the credit
union shall not be treated as if it were a
bank.
(9) Regulations.--The Secretary of the Treasury or
his delegate shall prescribe such regulations as may be
necessary to carry out this subsection, including
regulations providing for the application of paragraphs
(4) and (6) in the case of acquisitions, mergers, spin-
offs, and other reorganizations.
SEC. ____402. DEPRECIATION UNDER INCOME FORECAST METHOD.
(a) General Rule.--Section 167 (relating to depreciation) is
amended by redesignating subsection (g) as subsection (h) and
by inserting after subsection (f) the following new subsection:
``(g) Depreciation Under Income Forecast Method.--
``(1) In general.--If the depreciation deduction
allowable under this section to any taxpayer with
respect to any property is determined under the income
forecast method or any similar method--
``(A) in applying such method, the income
from the property shall include all income
earned in connection with the property before
the close of the 10th taxable year following
the taxable year in which the property was
placed in service,
``(B) the adjusted basis of the property
shall only include amounts with respect to
which the requirements of section 461(h) are
satisfied,
``(C) the depreciation deduction under such
method for the 10th taxable year beginning
after the taxable year in which the property
was placed in service shall be equal to the
adjusted basis of such property as of the
beginning of such 10th taxable year, and
``(D) such taxpayer shall pay (or be entitled
to receive) interest computed under the look-
back method of paragraph (2) for any
recomputation year.
``(2) Look-back method.--The interest computed under
the look-back method of this paragraph for any
recomputation year shall be determined by--
``(A) first determining the depreciation
deductions under this section with respect to
such property which would have been allowable
for prior taxable years if the determination of
the amounts so allowable had been made on the
basis of the sum of the following (instead of
the estimated income with respect to such
property)--
``(i) the actual income earned in
connection with such property for
periods before the close of the
recomputation year, and
``(ii) an estimate of the future
income to be earned in connection with
such property for periods after the
recomputation year,
``(B) second, determining (solely for
purposes of computing such interest) the
overpayment or underpayment of tax for each
such prior taxable year which would result
solely from the application of subparagraph
(A), and
``(C) then using the adjusted overpayment
rate (as defined in section 460(b)(7)),
compounded daily, on the overpayment or
underpayment determined under subparagraph (B).
For purposes of the preceding sentence, any cost
incurred after the property is placed in service (which
is not treated as a separate property under paragraph
(5)) shall be taken into account by discounting (using
the Federal mid-term rate determined under section
1274(d) as of the time such cost is incurred) such cost
to its value as of the date the property is placed in
service. The taxpayer may elect with respect to any
property to have the preceding sentence not apply to
such property.
``(3) Exception from look-back method.--Paragraph
(1)(D) shall not apply with respect to any property
which, when placed in service by the taxpayer, had a
basis of $100,000 or less.
``(4) Recomputation year.--For purposes of this
subsection, except as provided in regulations, the term
`recomputation year' means, with respect to any
property, the 3d and the 10th taxable years beginning
after the taxable year in which the property was placed
in service, unless the actual income earned in
connection with the property for the period before the
close of such 3d or 10th taxable year is within 10
percent of the income earned in connection with the
property for such period which was taken into account
under paragraph (1)(A).
``(5) Special rules.--
``(A) Certain costs treated as separate
property.--For purposes of this subsection, the
following costs shall be treated as separate
properties:
``(i) Any costs incurred with respect
to any property after the 10th taxable
year beginning after the taxable year
in which the property was placed in
service.
``(ii) Any costs incurred after the
property is placed in service and
before the close of such 10th taxable
year if such costs are significant and
give rise to a significant increase in
the income from the property which was
not included in the estimated income
from the property.
``(B) Syndication income from television
series.--In the case of property which is an
episode in a television series, income from
syndicating such series shall not be required
to be taken into account under this subsection
before the earlier of--
``(i) the 4th taxable year beginning
after the date the first episode in
such series is placed in service, or
``(ii) the earliest taxable year in
which the taxpayer has an arrangement
relating to the future syndication of
such series.
``(C) Special rules for financial
exploitation of characters, etc.--For purposes
of this subsection, in the case of television
and motion picture films, the income from the
property shall include income from the
exploitation of characters, designs, scripts,
scores, and other incidental income associated
with such films, but only to the extent that
such income is earned in connection with the
ultimate use of such items by, or the ultimate
sale of merchandise to, persons who are not
related persons (within the meaning of section
267(b)) to the taxpayer.
``(D) Collection of interest.--For purposes
of subtitle F (other than sections 6654 and
6655), any interest required to be paid by the
taxpayer under paragraph (1) for any
recomputation year shall be treated as an
increase in the tax imposed by this chapter for
such year.
``(E) Determinations.--For purposes of
paragraph (2), determinations of the amount of
income earned in connection with any property
shall be determined in the same manner as for
purposes of applying the income forecast
method; except that any income from the
disposition of such property shall be taken
into account.
``(F) Treatment of pass-thru entities.--Rules
similar to the rules of section 460(b)(4) shall
apply for purposes of this subsection.''
(b) Effective Date.--
(1) In general.--The amendment made by subsection (a)
shall apply to property placed in service after
September 13, 1995.
(2) Binding contracts.--The amendment made by
subsection (a) shall not apply to any property produced
or acquired by the taxpayer pursuant to a written
contract which was binding on September 13, 1995, and
at all times thereafter before such production or
acquisition.
SEC. ____403. REPEAL OF LOWER-OF-COST-OR-MARKET METHOD OF ACCOUNTING
FOR INVENTORIES.
(a) In General.--Section 471 (relating to general rule for
inventories) is amended by redesignating subsection (b) as
subsection (c) and by inserting after subsection (a) the
following new subsection:
``(b) Certain Write-Downs Not Permitted; Use of Mark-Downs
Required Under Retail Method.--
``(1) In general.--A taxpayer--
``(A) may not use the lower-of-cost-or-market
method of accounting for inventories, and
``(B) may not write-down items by reason of
being unsalable at normal prices or unusable in
the normal way because of damage,
imperfections, shop wear, changes of style, odd
or broken lots, or other similar causes.
Subparagraph (B) shall not apply to a taxpayer using a
mark-to-market method of accounting for both gains and
losses in inventory values.
``(2) Mark-downs required to be taken into account
under retail method.--The retail method of accounting
for inventories shall be applied by taking into account
mark-downs in determining the approximate cost of the
inventories.
``(3) Exception for certain small businesses.--
Paragraph (1) shall not apply to any taxpayer for the
taxable year if the average annual gross receipts of
the taxpayer for the 3 preceding taxable years do not
exceed $5,000,000. For purposes of the preceding
sentence, rules similar to the rules of paragraph (2)
and (3) of section 448(c) shall apply.
``(4) Regulations.--The Secretary shall prescribe
such regulations as may be appropriate to carry out the
purposes of this subsection, including regulations
relating to wash-sale-type transactions.''
(b) Conforming Amendments.--
(1) Clause (iii) of section 312(n)(4)(C) is amended
to read as follows:
``(iii) Inventory amount.--The
inventory amount of assets under the
first-in, first-out method authorized
by section 471 shall be determined
using the method authorized to be used
by the taxpayer under such section.''
(2) Subparagraph (C) of section 1363(d)(4) is amended
to read as follows:
``(iii) Inventory amount.--The
inventory amount of assets under a
method authorized by section 471 shall
be determined using the method
authorized to be used by the
corporation under such section.''
(c) Effective Date.--
(1) In general.--The amendments made by this section
shall apply to taxable years beginning after December
31, 1995.
(2) Change in method of accounting.--In the case of
any taxpayer required by this section to change its
method accounting for its first taxable year beginning
after December 31, 1995--
(A) such change shall be treated as initiated
by the taxpayer,
(B) such change shall be treated as made with
the consent of the Secretary of the Treasury,
and
(C) the net amount of the adjustments
required to be taken into account by the
taxpayer under section 481 of the Internal
Revenue Code of 1986 shall be taken into
account ratably over the 4-taxable year period
beginning with the first taxable year beginning
after December 31, 1995.
Subtitle E--Administrative Provisions
SEC. ____501. REPEAL OF DIESEL FUEL TAX REBATE TO PURCHASERS OF DIESEL-
POWERED AUTOMOBILES AND LIGHT TRUCKS.
(a) In General.--Section 6427 (relating to fuels not used for
taxable purposes) is amended by striking subsection (g).
(b) Conforming Amendments.--
(1) Paragraph (3) of section 34(a) is amended to read
as follows:
``(3) under section 6427 with respect to fuels used
for nontaxable purposes or resold during the taxable
year (determined without regard to section 6427(k)).''.
(2) Paragraphs (1) and (2)(A) of section 6427(i) are
each amended--
(A) by striking ``(g),'', and
(B) by striking ``(or a qualified diesel
powered highway vehicle purchased)'' each place
it appears.
(c) Effective Date.--The amendments made by this section
shall apply to vehicles purchased after December 31, 1995.
SEC. ____502. INCREASED INFORMATION REPORTING PENALTIES.
(a) In General.--Section 6721(a) (relating to imposition of
penalty) is amended by adding at the end the following new
paragraph:
``(3) Increased penalty if less than 97 percent of
aggregate amount of items reported correctly.--
``(A) In general.--Subject to the overall
limitation of paragraph (1), the amount of the
penalty under paragraph (1) for any failure
with respect to any information return shall be
equal to the greater of $50 or 5 percent of the
amount required to be reported correctly but
not so reported.
``(B) Exception where substantial
compliance.--Subparagraph (A) shall not apply
to failures with respect to information returns
required to be filed by a person during any
calendar year if the aggregate amount which is
timely and correctly reported on such returns
filed by the person for the calendar year is at
least 97 percent of the aggregate amount which
is required to be reported on such returns by
the person for the calendar year.''
(b) Conforming Amendment.--Paragraph (1) of section 6721(a)
is amended by striking ``In'' and inserting ``Except as
provided in paragraph (3), in''.
(c) Effective Date.--The amendments made by this section
shall apply to returns the due date for which (without regard
to extensions) is more than 90 days after the date of the
enactment of this Act.
Subtitle F--Casualty and Involuntary Conversion Provisions
SEC. ____601. BASIS ADJUSTMENT TO PROPERTY HELD BY CORPORATION WHERE
STOCK IN CORPORATION IS REPLACEMENT PROPERTY UNDER
INVOLUNTARY CONVERSION RULES.
(a) In General.--Subsection (b) of section 1033 is amended to
read as follows:
``(b) Basis of Property Acquired Through Involuntary
Conversion.--
``(1) Conversions described in subsection (a)(1).--If
the property was acquired as the result of a compulsory
or involuntary conversion described in subsection
(a)(1), the basis shall be the same as in the case of
the property so converted--
``(A) decreased in the amount of any money
received by the taxpayer which was not expended
in accordance with the provisions of law
(applicable to the year in which such
conversion was made) determining the taxable
status of the gain or loss upon such
conversion, and
``(B) increased in the amount of gain or
decreased in the amount of loss to the taxpayer
recognized upon such conversion under the law
applicable to the year in which such conversion
was made.
``(2) Conversions described in subsection (a)(2).--In
the case of property purchased by the taxpayer in a
transaction described in subsection (a)(2) which
resulted in the nonrecognition of any part of the gain
realized as the result of a compulsory or involuntary
conversion, the basis shall be the cost of such
property decreased in the amount of the gain not so
recognized; and if the property purchased consists of
more than 1 piece of property, the basis determined
under this sentence shall be allocated to the purchased
properties in proportion to their respective costs.
``(3) Property held by corporation the stock of which
is replacement property.--
``(A) In general.--If the basis of stock in a
corporation is decreased under paragraph (2),
an amount equal to such decrease shall also be
applied to reduce the basis of property held by
the corporation at the time the taxpayer
acquired control (as defined in subsection
(a)(2)(E)) of such corporation.
``(B) Limitation.--Subparagraph (A) shall not
apply to the extent that it would (but for this
subparagraph) require a reduction in the
aggregate adjusted bases of the property of the
corporation below the taxpayer's adjusted basis
of the stock in the corporation (determined
immediately after such basis is decreased under
paragraph (2)).
``(C) Allocation of basis reduction.--The
decrease required under subparagraph (A) shall
be allocated--
``(i) first to property which is
similar or related in service or use to
the converted property,
``(ii) second to depreciable property
(as defined in section 1017(b)(3)(B))
not described in clause (i), and
``(iii) then to other property.
``(D) Special rules.--
``(i) Reduction not to exceed
adjusted basis of property.--No
reduction in the basis of any property
under this paragraph shall exceed the
adjusted basis of such property
(determined without regard to such
reduction).
``(ii) Allocation of reduction among
properties.--If more than 1 property is
described in a clause of subparagraph
(C), the reduction under this paragraph
shall be allocated among such property
in proportion to the adjusted bases of
such property (as so determined).''.
(b) Effective Date.--The amendment made by this section shall
apply to involuntary conversions occurring after September 13,
1995.
Subtitle G--Excise Tax on Amounts of Private Excess Benefits
SEC. ____701. EXCISE TAXES FOR FAILURE BY CERTAIN CHARITABLE
ORGANIZATIONS TO MEET CERTAIN QUALIFICATION
REQUIREMENTS.
(a) In General.--Chapter 42 (relating to private foundations
and certain other tax-exempt organizations) is amended by
redesignating subchapter D as subchapter E and by inserting
after subchapter C the following new subchapter:
``Subchapter D--Failure By Certain Charitable Organizations To Meet
Certain Qualification Requirements
``Sec. 4958. Taxes on excess benefit transactions.
``SEC. 4958. TAXES ON EXCESS BENEFIT TRANSACTIONS.
``(a) Initial Taxes.--
``(1) On the disqualified person.--There is hereby
imposed on each excess benefit transaction a tax equal
to 25 percent of the excess benefit. The tax imposed by
this paragraph shall be paid by any disqualified person
referred to in subsection (f)(1) with respect to such
transaction.
``(2) On the management.--In any case in which a tax
is imposed by paragraph (1), there is hereby imposed on
the participation of any organization manager in the
excess benefit transaction, knowing that it is such a
transaction, a tax equal to 10 percent of the excess
benefit, unless such participation is not willful and
is due to reasonable cause. The tax imposed by this
paragraph shall be paid by any organization manager who
participated in the excess benefit transaction.
``(b) Additional Tax On the Disqualified Person.--In any case
in which an initial tax is imposed by subsection (a)(1) on an
excess benefit transaction and the excess benefit involved in
such transaction is not corrected within the taxable period,
there is hereby imposed a tax equal to 200 percent of the
excess benefit involved. The tax imposed by this subsection
shall be paid by any disqualified person referred to in
subsection (f)(1) with respect to such transaction.
``(c) Excess Benefit Transaction; Excess Benefit.--For
purposes of this section--
``(1) Excess benefit transaction.--
``(A) In general.--The term `excess benefit
transaction' means any transaction in which an
economic benefit is provided by an applicable
tax-exempt organization directly or indirectly
to or for the use of any disqualified person if
the value of the economic benefit provided
exceeds the value of the consideration
(including the performance of services)
received for providing such benefit. For
purposes of the preceding sentence, an economic
benefit shall not be treated as consideration
for the performance of services unless such
organization clearly indicated its intent to so
treat such benefit.
``(B) Excess benefit.--The term `excess
benefit' means the excess referred to in
subparagraph (A).
``(2) Authority to include certain other private
inurement.--To the extent provided in regulations
prescribed by the Secretary, the term `excess benefit
transaction' includes any transaction in which the
amount of any economic benefit provided to or for the
use of a disqualified person is determined in whole or
in part by the revenues of 1 or more activities of the
organization but only if such transaction results in
inurement not permitted under paragraph (3) or (4) of
section 501(c), as the case may be. In the case of any
such transaction, the excess benefit shall be the
amount of the inurement not so permitted.
``(d) Special Rules.--For purposes of this section--
``(1) Joint and several liability.--If more than 1
person is liable for any tax imposed by subsection (a)
or subsection (b), all such persons shall be jointly
and severally liable for such tax.
``(2) Limit for management.--With respect to any 1
excess benefit transaction, the maximum amount of the
tax imposed by subsection (a)(2) shall not exceed
$10,000.
``(e) Applicable Tax-Exempt Organization.--For purposes of
this subchapter, the term `applicable tax-exempt organization'
means--
``(1) any organization which (without regard to any
excess benefit) would be described in paragraph (3) or
(4) of section 501(c) and exempt from tax under section
501(a), and
``(2) any organization which was described in
paragraph (1) at any time during the 10-year period
ending on the date of the transaction.
Such term shall not include a private foundation (as defined in
section 509(a)).
``(f) Other Definitions.--For purposes of this section--
``(1) Disqualified person.--The term `disqualified
person' means, with respect to any transaction--
``(A) any person who was, at any time during
the 5-year period ending on the date of such
transaction, in a position to exercise
substantial influence over the affairs of the
organization,
``(B) a member of the family of an individual
described in subparagraph (A), and
``(C) a 35-percent controlled entity.
``(2) Organization manager.--The term `organization
manager' means, with respect to any applicable tax-
exempt organization, any officer, director, or trustee
of such organization (or any individual having powers
or responsibilities similar to those of officers,
directors, or trustees of the organization).
``(3) 35-percent controlled entity.--
``(A) In general.--The term `35-percent
controlled entity' means--
``(i) a corporation in which persons
described in subparagraph (A) or (B) of
paragraph (1) own more than 35 percent
of the total combined voting power,
``(ii) a partnership in which such
persons own more than 35 percent of the
profits interest, and
``(iii) a trust or estate in which
such persons own more than 35 percent
of the beneficial interest.
``(B) Constructive ownership rules.--Rules
similar to the rules of paragraphs (3) and (4)
of section 4946(a) shall apply for purposes of
this paragraph.
``(4) Family members.--The members of an individual's
family shall be determined under section 4946(d);
except that such members also shall include the
brothers and sisters (whether by the whole or half
blood) of the individual and their spouses.
``(5) Taxable period.--The term `taxable period'
means, with respect to any excess benefit transaction,
the period beginning with the date on which the
transaction occurs and ending on the earliest of--
``(A) the date of mailing a notice of
deficiency under section 6212 with respect to
the tax imposed by subsection (a)(1), or
``(B) the date on which the tax imposed by
subsection (a)(1) is assessed.
``(6) Correction.--The terms `correction' and
`correct' mean, with respect to any excess benefit
transaction, undoing the excess benefit to the extent
possible, and where fully undoing the excess benefit is
not possible, such additional corrective action as is
prescribed by the Secretary by regulations.''
(b) Application of Private Inurement Rule to Tax-Exempt
Organizations Described in Section 501(c)(4).--
(1) Paragraph (4) of section 501(c) is amended by
inserting ``(A)'' after ``(4)'' and by adding at the
end the following:
``(B) Subparagraph (A) shall not apply to an entity
unless no part of the net earnings of such entity
inures to the benefit of any private shareholder or
individual.''
(2) In the case of an organization operating on a
cooperative basis which, before the date of the
enactment of this Act, was determined by the Secretary
of the Treasury or his delegate, to be described in
section 501(c)(4) of the Internal Revenue Code of 1986
and exempt from tax under section 501(a) of such Code,
the allocation or return of net margins or capital to
the members of such organization in accordance with its
incorporating statute and bylaws shall not be treated
for purposes of such Code as the inurement of the net
earnings of such organization to the benefit of any
private shareholder or individual. The preceding
sentence shall apply only if such statute and bylaws
are substantially as such statute and bylaws were in
existence on the date of the enactment of this Act.
(c) Technical and Conforming Amendments.--
(1) Subsection (e) of section 4955 is amended--
(A) by striking ``Section 4945'' in the
heading and inserting ``Sections 4945 and
4958'', and
(B) by inserting before the period ``or an
excess benefit for purposes of section 4958''.
(2) Subsections (a), (b), and (c) of section 4963 are
each amended by inserting ``4958,'' after ``4955,''.
(3) Subsection (e) of section 6213 is amended by
inserting ``4958 (relating to private excess
benefit),'' before ``4971''.
(4) Paragraphs (2) and (3) of section 7422(g) are
each amended by inserting ``4958,'' after ``4955,''.
(5) Subsection (b) of section 7454 is amended by
inserting ``or whether an organization manager (as
defined in section 4958(f)(2)) has `knowingly'
participated in an excess benefit transaction (as
defined in section 4958(c)),'' after ``section
4912(b),''.
(6) The table of subchapters for chapter 42 is
amended by striking the last item and inserting the
following:
``Subchapter D. Failure by certain charitable organizations to
meet certain qualification requirements.
``Subchapter E. Abatement of first and second tier taxes in
certain cases.''
(d) Effective Dates.--
(1) In general.--The amendments made by this section
(other than subsection (b)) shall apply to excess
benefit transactions occurring on or after September
14, 1995.
(2) Binding contracts.--The amendments referred to in
paragraph (1) shall not apply to any benefit arising
from a transaction pursuant to any written contract
which was binding on September 13, 1995, and at all
times thereafter before such transaction occurred.
(3) Application of private inurement rule to tax-
exempt organizations described in section 501(c)(4).--
(A) In general.--The amendment made by
subsection (b) shall apply to inurement
occurring on or after September 14, 1995.
(B) Binding contracts.--The amendment made by
subsection (b) shall not apply to any inurement
occurring before January 1, 1997, pursuant to a
written contract which was binding on September
13, 1995, and at all times thereafter before
such inurement occurred.
SEC. ____702. REPORTING OF CERTAIN EXCISE TAXES AND OTHER INFORMATION.
(a) Reporting by Organizations Described in Section
501(c)(3).--Subsection (b) of section 6033 (relating to certain
organizations described in section 501(c)(3)) is amended by
striking ``and'' at the end of paragraph (9), by redesignating
paragraph (10) as paragraph (14), and by inserting after
paragraph (9) the following new paragraphs:
``(10) the respective amounts (if any) of the taxes
paid by the organization during the taxable year under
the following provisions:
``(A) section 4911 (relating to tax on excess
expenditures to influence legislation),
``(B) section 4912 (relating to tax on
disqualifying lobbying expenditures of certain
organizations), and
``(C) section 4955 (relating to taxes on
political expenditures of section 501(c)(3)
organizations),
``(11) the respective amounts (if any) of the taxes
paid by the organization, or any disqualified person
with respect to such organization, during the taxable
year under section 4958 (relating to taxes on private
excess benefit from certain charitable organizations),
``(12) such information as the Secretary may require
with respect to any excess benefit transaction (as
defined in section 4958),
``(13) the name of each disqualified person (as
defined in section 4958(f)(1)(A)) with respect to such
organization and such other information with respect to
such disqualified persons as the Secretary may
prescribe, and''.
(b) Organizations Described in Section 501(c)(4).--Section
6033 is amended by redesignating subsection (f) as subsection
(g) and by inserting after subsection (e) the following new
subsection:
``(f) Certain Organizations Described in Section 501(c)(4).--
Every organization described in section 501(c)(4) which is
subject to the requirements of subsection (a) shall include on
the return required under subsection (a) the information
referred to in paragraphs (11), (12) and (13) of subsection (b)
with respect to such organization.''
(c) Effective Date.--The amendments made by this section
shall apply to returns for taxable years beginning after the
date of the enactment of this Act.
SEC. ____703. INCREASE IN PENALTIES ON EXEMPT ORGANIZATIONS FOR FAILURE
TO FILE COMPLETE AND TIMELY ANNUAL RETURNS.
(a) In General.--Subparagraph (A) of section 6652(c)(1)
(relating to annual returns under section 6033) is amended by
striking ``$10'' and inserting ``$20'' and by striking
``$5,000'' and inserting ``$10,000''.
(b) Larger Penalty on Organizations Having Gross Receipts in
Excess of $1,000,000.--Subparagraph (A) of section 6652(c)(1)
is amended by adding at the end the following new sentence:
``In the case of an organization having gross receipts
exceeding $1,000,000 for any year, with respect to the return
required under section 6033 for such year, the first sentence
of this subparagraph shall be applied by substituting `$100'
for `$20' and, in lieu of applying the second sentence of this
subparagraph, the maximum penalty under this subparagraph shall
not exceed $50,000.''
(c) Effective Date.--The amendments made by this section
shall apply to returns for taxable years ending on or after
December 31, 1995.
Subtitle H--Extension of Certain Taxes
SEC. ____801. EXTENSION OF HAZARDOUS SUBSTANCE SUPERFUND TAXES.
(a) Extension of Taxes.--
(1) Environmental tax.--Section 59A(e) is amended to
read as follows:
``(e) Application of Tax.--The tax imposed by this section
shall apply to taxable years beginning after December 31, 1986,
and before January 1, 1997.''.
(2) Excise taxes.--Section 4611(e) is amended to read
as follows:
``(e) Application of Hazardous Substance Superfund Financing
Rate.--The Hazardous Substance Superfund financing rate under
this section shall apply after December 31, 1986, and before
October 1, 1996.''.
(b) Termination on Deposits of Taxes Into Hazardous Substance
Superfund.--Paragraph (1) of section 9507(b) is amended by
inserting ``before August 1, 1996'' after ``received''.
(c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. ____802. EXTENSION OF OIL SPILL LIABILITY TAX.
(a) In General.--Section 4611(f)(1) (relating to application
of oil spill liability trust fund financing rate) is amended by
striking ``after December 31, 1989, and before January 1,
1995'' and inserting ``after December 31, 1995, and before
October 1, 2002''.
(b) Effective Date.--The amendment made by this section shall
take effect on January 1, 1996.
SEC. ____803. EXTENSION OF FEDERAL UNEMPLOYMENT TAX.
Section 3301 (relating to rate of Federal unemployment tax)
is amended--
(1) by striking ``1998'' in paragraph (1) and
inserting ``2002'', and
(2) by striking ``1999'' in paragraph (2) and
inserting ``2003''.
Subtitle I--Provisions Relating To Individuals
SEC. ____851. NO ROLLOVER OR EXCLUSION OF GAIN ON SALE OF PRINCIPAL
RESIDENCE WHICH IS ATTRIBUTABLE TO DEPRECIATION
DEDUCTIONS.
(a) In General.--Subsection (d) of section 1034 (relating to
limitations) is amended by adding at the end the following new
paragraph:
``(3) Recognition of gain attributable to
depreciation.--Subsection (a) shall not apply to so
much of the gain from the sale of any residence as does
not exceed the portion of the depreciation adjustments
(as defined in section 1250(b)(3)) attributable to
periods after December 31, 1995, in respect of such
residence.''.
(b) Comparable Treatment Under 1-Time Exclusion of Gain on
Sale of Principal Residence.--Subsection (d) of section 121 is
amended by adding at the end the following new paragraph:
``(10) Recognition of gain attributable to
depreciation.--
``(A) In general.--Subsection (a) shall not
apply to so much of the gain from the sale of
any property as does not exceed the portion of
the depreciation adjustments (as defined in
section 1250(b)(3)) attributable to periods
after December 31, 1995, in respect of such
property.
``(B) Coordination with paragraph (5).--If
this section does not apply to gain
attributable to a portion of a residence by
reason of paragraph (5), subparagraph (A) shall
not apply to depreciation adjustments
attributable to such portion.''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years ending after December 31, 1995.
SEC. ____852. EXTENSION OF WITHHOLDING TO CERTAIN GAMBLING WINNINGS.
(a) Repeal of Exemption for Bingo and Keno.--Paragraph (5) of
section 3402(q) is amended to read as follows:
``(5) Exemption for slot machines.--The tax imposed
under paragraph (1) shall not apply to winnings from a
slot machine.''.
(b) Threshold Amount.--Paragraph (3) of section 3402(q) is
amended--
(1) by striking ``(B) and (C)'' in subparagraph (A)
and inserting ``(B), (C), and (D)'', and
(2) by adding at the end the following new
subparagraph:
``(D) Bingo and keno.--Proceeds of more than
$5,000 from a wager placed in a bingo or keno
game.''.
(c) Effective Date.--The amendments made by this section
shall take effect on January 1, 1996.
SEC. ____853. REPEAL OF SPECIAL RULE FOR RENTAL USE OF VACATION HOMES,
ETC., FOR LESS THAN 15 DAYS.
(a) In General.--Section 280A (relating to disallowance of
certain expenses in connection with business use of home,
rental of vacation homes, etc.) is amended by striking
subsection (g).
(b) No Basis Reduction Unless Depreciation Claimed.--Section
1016 is amended by redesignating subsection (e) as subsection
(f) and by inserting after subsection (d) the following new
subsection:
``(e) Special Rule Where Rental Use of Vacation Home, Etc.,
for Less Than 15 Days.--If a dwelling unit is used during the
taxable year by the taxpayer as a residence and such dwelling
unit is actually rented for less than 15 days during the
taxable year, the reduction under subsection (a)(2) by reason
of such rental use in any taxable year beginning after December
31, 1995, shall not exceed the depreciation deduction allowed
for such rental use.''
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 1995.
Subtitle J--Reform of Earned Income Credit
SEC. ____901. EARNED INCOME CREDIT DENIED TO INDIVIDUALS NOT AUTHORIZED
TO BE EMPLOYED IN THE UNITED STATES.
(a) In General.--Section 32(c)(1) (relating to individuals
eligible to claim the earned income credit) is amended by
adding at the end the following new subparagraph:
``(F) Identification number requirement.--The
term `eligible individual' does not include any
individual who does not include on the return
of tax for the taxable year--
``(i) such individual's taxpayer
identification number, and
``(ii) if the individual is married
(within the meaning of section 7703),
the taxpayer identification number of
such individual's spouse.''.
(b) Special Identification Number.--Section 32 is amended by
adding at the end the following new subsection:
``(l) Identification Numbers.--Solely for purposes of
subsections (c)(1)(F) and (c)(3)(D), a taxpayer identification
number means a social security number issued to an individual
by the Social Security Administration (other than a social
security number issued pursuant to clause (II) (or that portion
of clause (III) that relates to clause (II)) of section
205(c)(2)(B)(i) of the Social Security Act).''.
(c) Extension of Procedures Applicable to Mathematical or
Clerical Errors.--Section 6213(g)(2) (relating to the
definition of mathematical or clerical errors) is amended by
striking ``and'' at the end of subparagraph (D), by striking
the period at the end of subparagraph (E) and inserting a
comma, and by inserting after subparagraph (E) the following
new subparagraphs:
``(F) an omission of a correct taxpayer
identification number required under section 32
(relating to the earned income credit) to be
included on a return, and
``(G) an entry on a return claiming the
credit under section 32 with respect to net
earnings from self-employment described in
section 32(c)(2)(A) to the extent the tax
imposed by section 1401 (relating to self-
employment tax) on such net earnings has not
been paid.''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 1995.
SEC. ____902. RULES RELATING TO DENIAL OF EARNED INCOME CREDIT ON BASIS
OF DISQUALIFIED INCOME.
(a) Definition of Disqualified Income.--Paragraph (2) of
section 32(i) (defining disqualified income) is amended by
striking ``and'' at the end of subparagraph (B), by striking
the period at the end of subparagraph (C) and inserting ``,
and'', and by adding at the end the following new subparagraph:
``(D) the net capital gain (as defined in
section 1222) of the taxpayer for such taxable
year.''
(b) Effective Date.--The amendment made by this section shall
apply to taxable years beginning after December 31, 1995.
TITLE 9--MIDDLE CLASS BILL OF RIGHTS
SEC. ____00. SHORT TITLE; AMENDMENT OF 1986 CODE.
(a) Short Title.--This Act may be cited as the ``Middle-Class
Bill of Rights Tax Relief Act of 1996''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is
expressed in terms of an amendment to, or repeal of, a section
or other provision, the reference shall be considered to be
made to a section or other provision of the Internal Revenue
Code of 1986.
(c) Table of Contents.--
TITLE ____--MIDDLE CLASS BILL OF RIGHTS
Sec. ____00. Short title; amendment of 1986 Code.
Subtitle A--Middle Class Tax Relief
Sec. ____01. Credit for families with young children.
Sec. ____02. Deduction for higher education expenses.
Subtitle B--Provisions Relating To Individual Retirement Plans
Part I--Retirement Savings Incentives
SUBPART A--IRA DEDUCTION
Sec. ____11. Increase in income limitations.
Sec. ____12. Inflation adjustment for deductible amount and income
limitations.
Sec. ____13. Coordination of IRA deduction limit with elective deferral
limit.
SUBPART B--NONDEDUCTIBLE TAX-FREE IRA'S
Sec. ____21. Establishment of nondeductible tax-free individual
retirement accounts.
Part II--Penalty-Free Distributions
Sec. ____21. Distributions from certain plans may be used without
penalty to purchase first homes, to pay higher education or
financially devastating medical expenses, or by the
unemployed.
Sec. ____22. Contributions must be held at least 5 years in certain
cases.
Subtitle C--Increase in Deduction for Health Care Costs of Self-Employed
Individuals
Sec. ____31. Increase in self-employed individuals' deduction for health
insurance costs.
Subtitle A--Middle Class Tax Relief
SEC. ____01. CREDIT FOR FAMILIES WITH YOUNG CHILDREN.
(a) In General.--Subpart A of part IV of subchapter A of
chapter 1 (relating to nonrefundable personal credits) is
amended by inserting after section 22 the following new
section:
``SEC. 23. FAMILIES WITH YOUNG CHILDREN.
``(a) Allowance of Credit.--
``(1) In general.--In the case of an individual,
there shall be allowed as a credit against the tax
imposed by this chapter for the taxable year an amount
equal to $300 multiplied by the number of eligible
children of the taxpayer for the taxable year.
``(2) Increase in credit.--In the case of taxable
years beginning after December 31, 1998, paragraph (1)
shall be applied by substituting `$500' for `$300'.
``(b) Limitations.--
``(1) Phase-out of credit.--
``(A) In general.--The amount of the credit
allowed under subsection (a) shall be reduced
(but not below zero) by the amount determined
under subparagraph (B).
``(B) Amount of reduction.--The amount
determined under this subparagraph equals the
amount which bears the same ratio to the credit
(determined without regard to this subsection)
as--
``(i) the excess of--
``(I) the taxpayer's adjusted
gross income for such taxable
year, over
``(II) $60,000, bears to
``(ii) $15,000.
Any amount determined under this subparagraph
which is not a multiple of $10 shall be rounded
to the next lowest $10.
``(C) Adjusted gross income.--For purposes of
this paragraph, adjusted gross income of any
taxpayer shall be increased by any amount
excluded from gross income under section 911,
931, or 933.
``(2) Limitation based on amount of tax.--The credit
allowed by subsection (a) for the taxable year (after
the application of paragraph (1)) shall not exceed the
excess (if any) of--
``(A) the taxpayer's regular tax liability
for the taxable year reduced by the credits
allowable against such tax under this subpart
(other than this section) determined without
regard to section 26, over
``(B) the sum of--
``(i) the taxpayer's tentative
minimum tax for such taxable year, plus
``(ii) the credit allowed for the
taxable year under section 32.
``(c) Eligible Child.--For purposes of this section, the term
`eligible child' means any child (as defined in section
151(c)(3)) of the taxpayer--
``(1) who has not attained age 13 as of the close of
the calendar year in which the taxable year of the
taxpayer begins,
``(2) who is a dependent of the taxpayer with respect
to whom the taxpayer is allowed a deduction under
section 151 for such taxable year, and
``(3) whose TIN is included on the taxpayer's return
for such taxable year.
``(d) Inflation Adjustments.--In the case of a taxable year
beginning in a calendar year after 1999--
``(1) In general.--The $500 and $60,000 amounts
contained in subsections (a)(2) and (b)(2) shall each
be increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment
determined under section 1(f)(3) for the
calendar year in which the taxable year begins,
determined by substituting `calendar year 1998'
for `calendar year 1992' in subparagraph (B)
thereof.
``(2) Increase in phaseout range.--If the amount
applicable under subsection (a) for any taxable year
exceeds $500, subsection (b)(2)(B) shall be applied by
substituting an amount equal to 30 times such
applicable amount for `$15,000'.
``(3) Rounding.--If any amount as adjusted under
paragraph (1) is not a multiple of $100, such amount
shall be rounded to the next lowest multiple of $100.
``(e) Special Rules.--
``(1) Amount of credit may be determined under
tables.--The amount of the credit allowed by this
section may be determined under tables prescribed by
the Secretary.
``(2) Certain other rules apply.--Rules similar to
the rules of subsections (c)(1)(E) and (F), (d), and
(e) of section 32 shall apply for purposes of this
section.
``(f) Termination.--This section shall not apply to taxable
years beginning after December 31, 2000.''
(b) Clerical Amendment.--The table of sections for subpart A
of part IV of subchapter A of chapter 1 is amended by inserting
after the item relating to section 22 the following new item:
``Sec. 23. Families with young children.''
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 1995.
SEC. ____02. DEDUCTION FOR HIGHER EDUCATION EXPENSES.
(a) Deduction Allowed.-- Part VII of subchapter B of chapter
1 (relating to additional itemized deductions for individuals)
is amended by redesignating section 220 as section 221 and by
inserting after section 219 the following new section:
``SEC. 220. HIGHER EDUCATION TUITION AND FEES.
``(a) Allowance of Deduction.--In the case of an individual,
there shall be allowed as a deduction the amount of qualified
higher education expenses paid by the taxpayer during the
taxable year.
``(b) Limitations.--
``(1) Dollar limitation.--
``(A) In general.--The amount allowed as a
deduction under subparagraph (a) for any
taxable year shall not exceed $10,000.
``(B) Phase-in.--In the case of taxable years
beginning in 1996, 1997, or 1998, `$5,000'
shall be substituted for `$10,000' in
subparagraph (A).
``(2) Limitation based on modified adjusted gross
income.--
``(A) In general.--The amount which would
(but for this paragraph) be taken into account
under paragraph (1) shall be reduced (but not
below zero) by the amount determined under
subparagraph (B).
``(B) Amount of reduction.--The amount
determined under this subparagraph equals the
amount which bears the same ratio to the amount
which would be so taken into account as--
``(i) the excess of--
``(I) the taxpayer's modified
adjusted gross income for such
taxable year, over
``(II) $70,000 ($100,000 in
the case of a joint return),
bears to
``(ii) $20,000.
``(C) Modified adjusted gross income.--The
term `modified adjusted gross income' means the
adjusted gross income of the taxpayer for the
taxable year determined--
``(i) without regard to this section
and sections 911, 931, and 933, and
``(ii) after the application of
sections 86, 135, 219 and 469.
For purposes of sections 86, 135, 219, and 469,
adjusted gross income shall be determined
without regard to the deduction allowed under
this section.
``(D) Inflation adjustments.--
``(i) In general.--In the case of a
taxable year beginning after 1999, the
$70,000 and $100,000 amounts described
in subparagraph (B) shall each be
increased by an amount equal to--
``(I) such dollar amounts,
multiplied by
``(II) the cost-of-living
adjustment determined under
section 1(f)(3) for the
calendar year in which the
taxable year begins, determined
by substituting `calendar year
1998' for `calendar year 1992'
in subparagraph (B) thereof.
``(ii) Rounding.--If any amount as
adjusted under clause (i) is not a
multiple of $5,000, such amount shall
be rounded to the next lowest multiple
of $5,000.
``(c) Qualified Higher Education Expenses.--For purposes of
this section--
``(1) Qualified higher education expenses.--
``(A) In general.--The term `qualified higher
education expenses' means tuition and fees
charged by an educational institution and
required for the enrollment or attendance of--
``(i) the taxpayer,
``(ii) the taxpayer's spouse, or
``(iii) any dependent of the taxpayer
with respect to whom the taxpayer is
allowed a deduction under section 151,
as an eligible student at an institution of
higher education.
``(B) Exception for education involving
sports, etc.--Such term does not include
expenses with respect to any course or other
education involving sports, games, or hobbies,
unless such expenses--
``(i) are part of a degree program,
or
``(ii) are deductible under this
chapter without regard to this section.
``(C) Exception for nonacademic fees.--Such
term does not include any student activity
fees, athletic fees, insurance expenses, or
other expenses unrelated to a student's
academic course of instruction.
``(D) Eligible student.--For purposes of
subparagraph (A), the term `eligible student'
means a student who--
``(i) meets the requirements of
section 484(a)(1) of the Higher
Education Act of 1965 (20 U.S.C.
1091(a)(1)), as in effect on the date
of the enactment of this section, and
``(ii)(I) is carrying at least one-
half the normal full-time work load for
the course of study the student is
pursuing, as determined by the
institution of higher education, or
``(II) is enrolled in a course which
enables the student to improve the
student's job skills or to acquire new
job skills.
``(E) Identification requirement.--No
deduction shall be allowed under subsection (a)
to a taxpayer with respect to an eligible
student unless the taxpayer includes the name,
age, and taxpayer identification number of such
eligible student on the return of tax for the
taxable year.
``(2) Institution of higher education.--The term
`institution of higher education' means an institution
which--
``(A) is described in section 481 of the
Higher Education Act of 1965 (20 U.S.C. 1088),
as in effect on the date of the enactment of
this section, and
``(B) is eligible to participate in programs
under title IV of such Act.
``(d) Special Rules.--
``(1) No double benefit.--
``(A) In general.--No deduction shall be
allowed under subsection (a) for qualified
higher education expenses with respect to which
a deduction is allowable to the taxpayer under
any other provision of this chapter unless the
taxpayer irrevocably waives his right to the
deduction of such expenses under such other
provision.
``(B) Dependents.--No deduction shall be
allowed under subsection (a) to any individual
with respect to whom a deduction under section
151 is allowable to another taxpayer for a
taxable year beginning in the calendar year in
which such individual's taxable year begins.
``(C) Savings bond exclusion.--A deduction
shall be allowed under subsection (a) for
qualified higher education expenses only to the
extent the amount of such expenses exceeds the
amount excludable under section 135 for the
taxable year.
``(2) Limitation on taxable year of deduction.--
``(A) In general.--A deduction shall be
allowed under subsection (a) for any taxable
year only to the extent the qualified higher
education expenses are in connection with
enrollment at an institution of higher
education during the taxable year.
``(B) Certain prepayments allowed.--
Subparagraph (A) shall not apply to qualified
higher education expenses paid during a taxable
year if such expenses are in connection with an
academic term beginning during such taxable
year or during the 1st 3 months of the next
taxable year.
``(3) Adjustment for certain scholarships and
veterans benefits.--The amount of qualified higher
education expenses otherwise taken into account under
subsection (a) with respect to the education of an
individual shall be reduced (before the application of
subsection (b)) by the sum of the amounts received with
respect to such individual for the taxable year as--
``(A) a qualified scholarship which under
section 117 is not includable in gross income,
``(B) an educational assistance allowance
under chapter 30, 31, 32, 34, or 35 of title
38, United States Code, or
``(C) a payment (other than a gift, bequest,
devise, or inheritance within the meaning of
section 102(a)) for educational expenses, or
attributable to enrollment at an eligible
educational institution, which is exempt from
income taxation by any law of the United
States.
``(4) No deduction for married individuals filing
separate returns.--If the taxpayer is a married
individual (within the meaning of section 7703), this
section shall apply only if the taxpayer and the
taxpayer's spouse file a joint return for the taxable
year.
``(5) Nonresident aliens.--If the taxpayer is a
nonresident alien individual for any portion of the
taxable year, this section shall apply only if such
individual is treated as a resident alien of the United
States for purposes of this chapter by reason of an
election under subsection (g) or (h) of section 6013.
``(6) Regulations.--The Secretary may prescribe such
regulations as may be necessary or appropriate to carry
out this section, including regulations requiring
recordkeeping and information reporting.
``(e) Termination.--This section shall not apply to taxable
years beginning after December 31, 2000.''
(b) Deduction Allowed in Computing Adjusted Gross Income.--
Section 62(a) is amended by inserting after paragraph (15) the
following new paragraph:
``(16) Higher education tuition and fees.--The
deduction allowed by section 220.''
(c) Conforming Amendment.--The table of sections for part VII
of subchapter B of chapter 1 is amended by striking the item
relating to section 220 and inserting:
``Sec. 220. Higher education tuition and fees.
``Sec. 221. Cross reference.''
(d) Effective Date.--The amendments made by this section
shall apply to payments made after December 31, 1995.
Subtitle B--Provisions Relating To Individual Retirement Plans
PART I--RETIREMENT SAVINGS INCENTIVES
Subpart A--IRA Deduction
SEC. ____11. INCREASE IN INCOME LIMITATIONS.
(a) In General.--Subparagraph (B) of section 219(g)(3) is
amended--
(1) by striking ``$40,000'' in clause (i) and
inserting ``$80,000'', and
(2) by striking ``$25,000'' in clause (ii) and
inserting ``$50,000''.
(b) Phase-Out of Limitations.--Clause (ii) of section
219(g)(2)(A) is amended by striking ``$10,000'' and inserting
``an amount equal to 10 times the dollar amount applicable for
the taxable year under subsection (b)(1)(A)''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 1995,
and before January 1, 2001.
SEC. ____12. INFLATION ADJUSTMENT FOR DEDUCTIBLE AMOUNT AND INCOME
LIMITATIONS.
(a) In General.--Section 219 is amended by redesignating
subsection (h) as subsection (i) and by inserting after
subsection (g) the following new subsection:
``(h) Cost-of-Living Adjustments.--
``(1) In general.--In the case of any taxable year
beginning in a calendar year after 1996, each dollar
amount to which this subsection applies shall be
increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment
determined under section 1(f)(3) for the
calendar year in which the taxable year begins,
determined by substituting `calendar year 1995'
for `calendar year 1992' in subparagraph (B)
thereof.
``(2) Dollar amounts to which subsection applies.--
This subsection shall apply to--
``(A) the $2,000 amounts under subsection
(b)(1)(A) and (c), and
``(B) the applicable dollar amounts under
subsection (g)(3)(B).
``(3) Rounding rules.--
``(A) Deduction amounts.--If any amount
referred to in paragraph (2)(A) as adjusted
under paragraph (1) is not a multiple of $500,
such amount shall be rounded to the next lowest
multiple of $500.
``(B) Applicable dollar amounts.--If any
amount referred to in paragraph (2)(B) as
adjusted under paragraph (1) is not a multiple
of $5,000, such amount shall be rounded to the
next lowest multiple of $5,000.''
(b) Conforming Amendments.--
(1) Clause (i) of section 219(c)(2)(A) is amended to
read as follows:
``(i) the sum of $250 and the dollar
amount in effect for the taxable year
under subsection (b)(1)(A), or''.
(2) Section 408(a)(1) is amended by striking ``in
excess of $2,000 on behalf of any individual'' and
inserting ``on behalf of any individual in excess of
the amount in effect for such taxable year under
section 219(b)(1)(A)''.
(3) Section 408(b)(2)(B) is amended by striking
``$2,000'' and inserting ``the dollar amount in effect
under section 219(b)(1)(A)''.
(4) Subparagraph (A) of section 408(d)(5) is amended
by striking ``$2,250'' and inserting ``the dollar
amount in effect for the taxable year under section
219(c)(2)(A)(i)''.
(5) Section 408(j) is amended by striking ``$2,000''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 1995,
and before January 1, 2001.
SEC. ____13. COORDINATION OF IRA DEDUCTION LIMIT WITH ELECTIVE DEFERRAL
LIMIT.
(a) In General.--Section 219(b) (relating to maximum amount
of deduction) is amended by adding at the end the following new
paragraph:
``(4) Coordination with elective deferral limit.--The
amount determined under paragraph (1) or subsection
(c)(2) with respect to any individual for any taxable
year shall not exceed the excess (if any) of--
``(A) the limitation applicable for the
taxable year under section 402(g)(1), over
``(B) the elective deferrals (as defined in
section 402(g)(3)) of such individual for such
taxable year.''
(b) Conforming Amendment.--Section 219(c) is amended by
adding at the end the following new paragraph:
``(3) Cross Reference.--
``For reduction in paragraph (2) amount, see subsection
(b)(4).''
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 1995,
and before January 1, 2001.
Subpart B--Nondeductible Tax-Free IRA's
SEC. ____21. ESTABLISHMENT OF NONDEDUCTIBLE TAX-FREE INDIVIDUAL
RETIREMENT ACCOUNTS.
(a) In General.--Subpart A of part I of subchapter D of
chapter 1 (relating to pension, profit-sharing, stock bonus
plans, etc.) is amended by inserting after section 408 the
following new section:
``SEC. 408A. SPECIAL INDIVIDUAL RETIREMENT ACCOUNTS.
``(a) General Rule.--Except as provided in this chapter, a
special individual retirement account shall be treated for
purposes of this title in the same manner as an individual
retirement plan.
``(b) Special Individual Retirement Account.--For purposes of
this title, the term `special individual retirement account'
means an individual retirement plan which is designated at the
time of establishment of the plan as a special individual
retirement account.
``(c) Treatment of Contributions.--
``(1) No deduction allowed.--No deduction shall be
allowed under section 219 for a contribution to a
special individual retirement account.
``(2) Contribution limit.--The aggregate amount of
contributions for any taxable year to all special
individual retirement accounts maintained for the
benefit of an individual shall not exceed the excess
(if any) of--
``(A) the maximum amount allowable as a
deduction under section 219 with respect to
such individual for such taxable year, over
``(B) the amount so allowed.
``(3) Special rules for qualified transfers.--
``(A) In general.--No rollover contribution
may be made to a special individual retirement
account unless it is a qualified transfer.
``(B) Limit not to apply.--The limitation
under paragraph (2) shall not apply to a
qualified transfer to a special individual
retirement account.
``(d) Tax Treatment of Distributions.--
``(1) In general.--Except as provided in this
subsection, any amount paid or distributed out of a
special individual retirement account shall not be
included in the gross income of the distributee.
``(2) Exception for earnings on contributions held
less than 5 years.--
``(A) In general.--Any amount distributed out
of a special individual retirement account
which consists of earnings allocable to
contributions made to the account during the 5-
year period ending on the day before such
distribution shall be included in the gross
income of the distributee for the taxable year
in which the distribution occurs.
``(B) Ordering rule.--
``(i) First-in, first-out rule.--
Distributions from a special individual
retirement account shall be treated as
having been made--
``(I) first from the earliest
contribution (and earnings
allocable thereto) remaining in
the account at the time of the
distribution, and
``(II) then from other
contributions (and earnings
allocable thereto) in the order
in which made.
``(ii) Allocations between
contributions and earnings.--Any
portion of a distribution allocated to
a contribution (and earnings allocable
thereto) shall be treated as allocated
first to the earnings and then to the
contribution.
``(iii) Allocation of earnings.--
Earnings shall be allocated to a
contribution in such manner as the
Secretary may by regulations prescribe.
``(iv) Contributions in same year.--
Except as provided in regulations, all
contributions made during the same
taxable year may be treated as 1
contribution for purposes of this
subparagraph.
``(C) Cross reference.--
``For additional tax for early withdrawal, see section 72(t).
``(3) Qualified transfer.--
``(A) In general.--Paragraph (2) shall not
apply to any distribution which is transferred
in a qualified transfer to another special
individual retirement account.
``(B) Contribution period.--For purposes of
paragraph (2), the special individual
retirement account to which any contributions
are transferred shall be treated as having held
such contributions during any period such
contributions were held (or are treated as held
under this subparagraph) by the special
individual retirement account from which
transferred.
``(4) Special rules relating to certain transfers.--
``(A) In general.--Notwithstanding any other
provision of law, in the case of a qualified
transfer to a special individual retirement
account from an individual retirement plan
which is not a special individual retirement
account--
``(i) there shall be included in
gross income any amount which, but for
the qualified transfer, would be
includible in gross income, but
``(ii) section 72(t) shall not apply
to such amount.
``(B) Time for inclusion.--In the case of any
qualified transfer which occurs before January
1, 1997, any amount includible in gross income
under subparagraph (A) with respect to such
contribution shall be includible ratably over
the 4-taxable year period beginning in the
taxable year in which the amount was paid or
distributed out of the individual retirement
plan.
``(e) Qualified Transfer.--For purposes of this section--
``(1) In general.--The term `qualified transfer'
means a transfer to a special individual retirement
account from another such account or from an individual
retirement plan but only if such transfer meets the
requirements of section 408(d)(3).
``(2) Limitation.--A transfer otherwise described in
paragraph (1) shall not be treated as a qualified
transfer if the taxpayer's adjusted gross income for
the taxable year of the transfer exceeds the sum of--
``(A) the applicable dollar amount, plus
``(B) the dollar amount applicable for the
taxable year under section 219(g)(2)(A)(ii).
This paragraph shall not apply to a transfer from a
special individual retirement account to another
special individual retirement account.
``(3) Definitions.--For purposes of this subsection,
the terms `adjusted gross income' and `applicable
dollar amount' have the meanings given such terms by
section 219(g)(3), except subparagraph (A)(ii) thereof
shall be applied without regard to the phrase `or the
deduction allowable under this section'.''
(b) Early Withdrawal Penalty.--Section 72(t) is amended by
adding at the end the following new paragraph:
``(6) Rules relating to special individual retirement
accounts.--In the case of a special individual
retirement account under section 408A--
``(A) this subsection shall only apply to
distributions out of such account which consist
of earnings allocable to contributions made to
the account during the 5-year period ending on
the day before such distribution, and
``(B) paragraph (2)(A)(i) shall not apply to
any distribution described in subparagraph
(A).''
(c) Excess Contributions.--Section 4973(b) is amended by
adding at the end the following new sentence: ``For purposes of
paragraphs (1)(B) and (2)(C), the amount allowable as a
deduction under section 219 shall be computed without regard to
section 408A.''
(d) Conforming Amendment.--The table of sections for subpart
A of part I of subchapter D of chapter 1 is amended by
inserting after the item relating to section 408 the following
new item:
``Sec. 408A. Special individual retirement accounts.''
(e) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 1995,
and before January 1, 2001.
PART II--PENALTY-FREE DISTRIBUTIONS
SEC. ____21. DISTRIBUTIONS FROM CERTAIN PLANS MAY BE USED WITHOUT
PENALTY TO PURCHASE FIRST HOMES, TO PAY HIGHER
EDUCATION OR FINANCIALLY DEVASTATING MEDICAL
EXPENSES, OR BY THE UNEMPLOYED.
(a) In General.--Paragraph (2) of section 72(t) (relating to
exceptions to 10-percent additional tax on early distributions
from qualified retirement plans) is amended by adding at the
end the following new subparagraph:
``(D) Distributions from certain plans for
first home purchases or educational expenses.--
Distributions to an individual from an
individual retirement plan--
``(i) which are qualified first-time
homebuyer distributions (as defined in
paragraph (7)); or
``(ii) to the extent such
distributions do not exceed the
qualified higher education expenses (as
defined in paragraph (8)) of the
taxpayer for the taxable year.''
(b) Financially Devastating Medical Expenses.--
(1) In general.--Section 72(t)(3)(A) is amended by
striking ``(B),''.
(2) Certain lineal descendants and ancestors treated
as dependents and long-term care services treated as
medical care.--Subparagraph (B) of section 72(t)(2) is
amended by striking ``medical care'' and all that
follows and inserting ``medical care determined--
``(i) without regard to whether the
employee itemizes deductions for such
taxable year, and
``(ii) in the case of an individual
retirement plan--
``(I) by treating such
employee's dependents as
including all children,
grandchildren and ancestors of
the employee or such employee's
spouse and
``(II) by treating qualified
long-term care services (as
defined in paragraph (9)) as
medical care for purposes of
this subparagraph (B).''
(3) Conforming amendment.--Subparagraph (B) of
section 72(t)(2) is amended by striking ``or (C)'' and
inserting ``, (C) or (D)''.
(c) Definitions.--Section 72(t), as amended by this Act, is
amended by adding at the end the following new paragraphs:
``(7) Qualified first-time homebuyer distributions.--
For purposes of paragraph (2)(D)(i)--
``(A) In general.--The term `qualified first-
time homebuyer distribution' means any payment
or distribution received by an individual to
the extent such payment or distribution is used
by the individual before the close of the 60th
day after the day on which such payment or
distribution is received to pay qualified
acquisition costs with respect to a principal
residence of a first-time homebuyer who is such
individual or the spouse, child (as defined in
section 151(c)(3)), or grandchild of such
individual.
``(B) Qualified acquisition costs.--For
purposes of this paragraph, the term `qualified
acquisition costs' means the costs of
acquiring, constructing, or reconstructing a
residence. Such term includes any usual or
reasonable settlement, financing, or other
closing costs.
``(C) First-time homebuyer; other
definitions.--For purposes of this paragraph--
``(i) First-time homebuyer.--The term
`first-time homebuyer' means any
individual if--
``(I) such individual (and if
married, such individual's
spouse) had no present
ownership interest in a
principal residence during the
3-year period ending on the
date of acquisition of the
principal residence to which
this paragraph applies, and
``(II) subsection (h) or (k)
of section 1034 did not suspend
the running of any period of
time specified in section 1034
with respect to such individual
on the day before the date the
distribution is applied
pursuant to subparagraph (A).
In the case of an individual described
in section 143(i)(1)(C) for any year,
an ownership interest shall not include
any interest under a contract of deed
described in such section. An
individual who loses an ownership
interest in a principal residence
incident to a divorce or legal
separation is deemed for purposes of
this subparagraph to have had no
ownership interest in such principal
residence within the period referred to
in subclause (II).
``(ii) Principal residence.--The term
`principal residence' has the same
meaning as when used in section 1034.
``(iii) Date of acquisition.--The
term `date of acquisition' means the
date--
``(I) on which a binding
contract to acquire the
principal residence to which
subparagraph (A) applies is
entered into, or
``(II) on which construction
or reconstruction of such a
principal residence is
commenced.
``(D) Special rule where delay in
acquisition.--If any distribution from any
individual retirement plan fails to meet the
requirements of subparagraph (A) solely by
reason of a delay or cancellation of the
purchase or construction of the residence, the
amount of the distribution may be contributed
to an individual retirement plan as provided in
section 408(d)(3)(A)(i) (determined by
substituting `120 days' for `60 days' in such
section), except that--
``(i) section 408(d)(3)(B) shall not
be applied to such contribution, and
``(ii) such amount shall not be taken
into account in determining whether
section 408(d)(3)(A)(i) applies to any
other amount.
``(8) Qualified higher education expenses.--For
purposes of paragraph (2)(D)(ii)--
``(A) In general.--The term `qualified higher
education expenses' means tuition and fees
required for the enrollment or attendance of--
``(i) the taxpayer,
``(ii) the taxpayer's spouse,
``(iii) a dependent of the taxpayer
with respect to whom the taxpayer is
allowed a deduction under section 151,
or
``(iv) the taxpayer's child (as
defined in section 151(c)(3)) or
grandchild,
as an eligible student at an institution of
higher education (as defined in paragraphs
(1)(D) and (2) of section 220(c)).
``(B) Exceptions.--The term `qualified higher
education expenses' does not include expenses
described in subparagraphs (B) and (C) of
section 220(c)(1).
``(C) Coordination with savings bond
provisions.--The amount of qualified higher
education expenses for any taxable year shall
be reduced by any amount excludable from gross
income under section 135.
``(9) Qualified long-term care services.--For
purposes of paragraph (2)(B)--
``(A) In general.--The term `qualified long-
term care services' means necessary diagnostic,
curing, mitigating, treating, preventive,
therapeutic, and rehabilitative services, and
maintenance and personal care services (whether
performed in a residential or nonresidential
setting) which--
``(i) are required by an individual
during any period the individual is an
incapacitated individual (as defined in
subparagraph (B)),
``(ii) have as their primary
purpose--
``(I) the provision of needed
assistance with 1 or more
activities of daily living (as
defined in subparagraph (C)),
or
``(II) protection from
threats to health and safety
due to severe cognitive
impairment, and
``(iii) are provided pursuant to a
continuing plan of care prescribed by a
licensed professional (as defined in
subparagraph (D)).
``(B) Incapacitated individual.--The term
`incapacitated individual' means any individual
who--
``(i) is unable to perform, without
substantial assistance from another
individual (including assistance
involving cueing or substantial
supervision), at least 2 activities of
daily living as defined in subparagraph
(C), or
``(ii) has severe cognitive
impairment as defined by the Secretary
in consultation with the Secretary of
Health and Human Services.
Such term shall not include any individual
otherwise meeting the requirements of the
preceding sentence unless a licensed
professional within the preceding 12-month
period has certified that such individual meets
such requirements.
``(C) Activities of daily living.--Each of
the following is an activity of daily living:
``(i) Eating.
``(ii) Toileting.
``(iii) Transferring.
``(iv) Bathing.
``(v) Dressing.
``(D) Licensed professional.--The term
`licensed professional' means--
``(i) a physician or registered
professional nurse, or
``(ii) any other individual who meets
such requirements as may be prescribed
by the Secretary after consultation
with the Secretary of Health and Human
Services.
``(E) Certain services not included.--The
term `qualified long-term care services' shall
not include any services provided to an
individual--
``(i) by a relative (directly or
through a partnership, corporation, or
other entity) unless the relative is a
licensed professional with respect to
such services, or
``(ii) by a corporation or
partnership which is related (within
the meaning of section 267(b) or
707(b)) to the individual.
For purposes of this subparagraph, the term
`relative' means an individual bearing a
relationship to the individual which is
described in paragraphs (1) through (8) of
section 152(a).''
(d) Penalty-Free Distributions for Certain Unemployed
Individuals.--Paragraph (2) of section 72(t) is amended by
adding at the end the following new subparagraph:
``(E) Distributions to unemployed
individuals.--A distribution from an individual
retirement plan to an individual after
separation from employment, if--
``(i) such individual has received
unemployment compensation for 12
consecutive weeks under any Federal or
State unemployment compensation law by
reason of such separation, and
``(ii) such distributions are made
during any taxable year during which
such unemployment compensation is paid
or the succeeding taxable year.''
(e) Effective Date.--The amendments made by this section
shall apply to payments and distributions after December 31,
1995, and before January 1, 2001.
SEC. ____22. CONTRIBUTIONS MUST BE HELD AT LEAST 5 YEARS IN CERTAIN
CASES.
(a) In General.--Section 72(t), as amended by this Act, is
amended by adding at the end the following new paragraph:
``(10) Certain contributions must be held 5 years.--
``(A) In general.--Paragraph (2)(A)(i) shall
not apply to any amount distributed out of an
individual retirement plan (other than a
special individual retirement account) which is
allocable to contributions made to the plan
during the 5-year period ending on the date of
such distribution (and earnings on such
contributions).
``(B) Ordering rule.--For purposes of this
paragraph, distributions shall be treated as
having been made--
``(i) first from the earliest
contribution (and earnings allocable
thereto) remaining in the account at
the time of the distribution, and
``(ii) then from other contributions
(and earnings allocable thereto) in the
order in which made.
Earnings shall be allocated to contributions in
such manner as the Secretary may prescribe.
``(C) Special rule for rollovers.--
``(i) Pension plans.--Subparagraph
(A) shall not apply to distributions
out of an individual retirement plan
which are allocable to rollover
contributions to which section 402(c),
403(a)(4), or 403(b)(8) applied.
``(ii) Contribution period.--For
purposes of subparagraph (A), amounts
shall be treated as having been held by
a plan during any period such
contributions were held (or are treated
as held under this clause) by any
individual retirement plan from which
transferred.
``(D) Special accounts.--For rules applicable
to special individual retirement accounts under
section 408A, see paragraph (8).''
(b) Effective Date.--The amendment made by this section shall
apply to contributions (and earnings allocable thereto) which
are made after December 31, 1995, and before January 1, 2001.
Subtitle C--Increase in Deduction for Health Care Costs of Self-
Employed Individuals
SEC. ____31. INCREASE IN SELF-EMPLOYED INDIVIDUALS' DEDUCTION FOR
HEALTH INSURANCE COSTS.
(a) In General.--Section 162(l) (relating to special rules
for health insurance costs of self-employed individuals) is
amended--
(1) by striking ``30 percent'' in paragraph (1) and
inserting ``the applicable percentage'', and
(2) by adding at the end the following new paragraph:
``(6) Applicable percentage.--For purposes of this
subsection, the term `applicable percentage' means the
percentage determined in accordance with the following
table:
``In the case of taxable years The applicable
beginning in: percentage is:
1996...................................................... 35
1997...................................................... 35
1998...................................................... 40
1999...................................................... 45
2000...................................................... 50
2001 and thereafter....................................... 30.''
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 1995.
TITLE X--BUDGET ENFORCEMENT
SEC. 10001. PURPOSE.
The Congress declares that it is essential to--
(1) preserve the deficit reduction achieved by this
Act;
(2) extend the system of discretionary spending
limits for the single discretionary category set forth
in section 601 of the Congressional Budget Act of 1974;
(3) extend the pay-as-you-go enforcement system;
(4) prohibit the consideration of direct spending or
receipts legislation that would decrease the pay-as-
you-go surplus achieved by this Act and created under
section 252 of the Balanced Budget and Emergency
Deficit Contract of 1985; and
(5) provide for additional deficit reduction,
investment, and tax relief in the event that actual
deficit reduction exceeds that currently projected by
the Congressional Budget Office to result from
enactment of this Act.
SEC. 10002. DISCRETIONARY SPENDING LIMITS.
(a) Definition of ``Discretionary Spending Limit''.--
Section 601(a)(2) of the Congressional Budget Act of 1974 is
amended--
(1) in subparagraph (E) by striking the word ``and'';
and
(2) by striking subparagraph (F) and inserting the
following:
``(F) with respect to fiscal year 1996, for the
discretionary category: $502,000,000,000 in new budget
authority and $539,535,000,000 in outlays;
``(G) with respect to fiscal year 1997, for the
discretionary category: $508,000,000,000 in new budget
authority and $546,851,000,000 in outlays;
``(H) with respect to fiscal year 1998, for the
discretionary category: $514,000,000,000 in new budget
authority and $540,041,000,000 in outlays;
``(I) with respect to fiscal year 1999, for the
discretionary category: $508,000,000,000 in new budget
authority and $542,166,000,000 in outlays;
``(J) with respect to fiscal year 2000, for the
discretionary category: $504,000,000,000 in new budget
authority and $541,759,000,000 in outlays;
``(K) with respect to fiscal year 2001, for the
discretionary category: $500,000,000,000 in new budget
authority and $530,833,000,000 in outlays; and
``(L) with respect to fiscal year 2002, for the
discretionary category: $482,000,000,000 in new budget
authority and $514,088,000,000 in outlays;''.
(b) Point of Order in the Senate.--Section 601(b)(1) of the
Congressional Budget Act of 1974 is amended to read as follows:
``(1) Except as otherwise provided in this Act, it shall
not be in order in the Senate to consider any concurrent
resolution on the budget for fiscal year 1996, 1997, 1998,
1999, 2000, 2001, or 2002 (or amendment, motion, or conference
report on such a resolution) that would exceed any of the
deficit targets or discretionary spending limits in this
title.''.
(c) Conforming Amendments.--(1) Section 251 of the Balanced
Budget and Emergency Deficit Control Act of 1985 is amended--
(A) in subsection (a) by striking ``Fiscal Years
1991-1998 Enforcement.--'' and inserting ``Fiscal Years
1991-2002 Enforcement.--'';
(B) in subsection (b)(1)--
(i) in the matter before subparagraph (A),
by--
(I) striking ``When the President
submits the budget under section
1105(a) of title 31, United States
Code, for budget year 1992, 1993, 1994,
1995, 1996, 1997, or 1998'' and
inserting ``When the President submits
the budget under section 1105(a) of
title 31, United States Code, for
budget year 1992, 1993, 1994, 1995,
1996, 1997, 1998, 1999, 2000, 2001, or
2002''; and
(II) striking ``the budget shall
include, adjustments to discretionary
spending limits (and those limits as
cumulatively adjusted) for the budget
year and each outyear through 1998''
and inserting ``the budget shall
include, adjustments to discretionary
spending limits (and those limits as
cumulatively adjusted) for the budget
year and each outyear through 2002'';
(ii) in paragraph (1)(B), by striking
``budget year 1996, 1997, or 1998,'' and
inserting ``budget year 1996, 1997, 1998, 2000,
2001, or 2002,'';
(iii) in the matter before subparagraph (A)
in paragraph (2) by--
(I) striking ``When OMB submits a
sequestration report under section 254
(g) or (h) for fiscal year 1991, 1992,
1993, 1994, 1995, 1996, 1997, or
1998,'' and inserting ``When OMB
submits a sequestration report under
section 254(g) or (h) for fiscal year
1991, 1992, 1993, 1994, 1995, 1996,
1997, 1998, 1999, 2000, 2001, or
2002,''; and
(II) striking ``for the fiscal year
and each succeeding year through
1998,'' and inserting ``for the fiscal
year and each succeeding year through
2002,'';
``(iv) by amending paragraph (2)(A) to read
as follows:
``(A) IRS funding.--(i) To the extent that
appropriations are enacted that provide
additional new budget authority or result in
additional outlays for the Internal Revenue
Service compliance initiative in any fiscal
year, the adjustments for that year shall be
those amounts of additional new budget
authority or additional outlays (as defined in
clause (ii)), but not to exceed in any fiscal
year $405,000,000 in new budget authority and
$405,000,000 in outlays.
``(ii) Additional amounts.--As used in this
subparagraph, the terms `additional new budget
authority' or `additional outlays' shall mean,
for any fiscal year, budget authority or
outlays (as the case may be) in excess of the
amounts requested for that fiscal year for the
Internal Revenue Service in the President's
Budget for fiscal year 1996.'';
(v) in paragraph (2)(E)(iv), by striking
``fiscal years 1994, 1995, 1996, 1997, and
1998,'' and inserting ``fiscal years 1994,
1995, 1996, 1997, 1998, 1999, 2000, 2001, and
2002''; and
(vi) in paragraph (2)(F), by striking
``fiscal year 1996, 1997, or 1998'' and
inserting ``fiscal year 1996, 1997, 1998, 1999,
2000, 2001, or 2002''.
(2) Reports.--Sections 254(d)(2) and 254(g)(2)(A) of the
Balanced Budget and Emergency Deficit Control Act of 1985 are
each amended by striking ``1998'' and inserting ``2002''.
(3) Congressional enforcement.--
(A) Title VI of the Congressional Budget Act of 1974
is amended--
(i) in section 602(c) and (d), by striking
``1995'' each time it appears and inserting
``2002'';
(ii) in section 606(a), by striking ``fiscal
year 1992, 1993, 1994, or 1995,'' and inserting
``any fiscal year''; and
(iii) in section 606(d)(1), by striking
``fiscal years 1992, 1993, 1994, and 1995,''
and inserting any fiscal year''.
(B) Section 210 of House Concurrent Resolution 67
(104th Congress) is repealed.
(4) Expiration.--(A) Notwithstanding section 275(b) of the
Balanced Budget and Emergency Deficit Control Act of 1985,
sections 250, 251, 252, and 254 through 258C of that Act, the
second sentence of section 904(c) of the Congressional Budget
Act, and the second sentence of section 904(d) of the
Congressional Budget Act shall expire on September 30, 2002.
(B) Section 607 of the Congressional Budget Act of 1974 is
amended by striking ``shall apply to fiscal years 1991 to
1998'' and inserting ``shall apply to fiscal years 1991 to
2002''
SEC. 10003. ENFORCING PAY-AS-YOU-GO.
(a) Section 252 of the Balanced Budget and Emergency
Deficit Control Act of 1985 is amended--
(1) in subsection (a), by striking ``Fiscal Year
1992-1998 Enforcement.'' and inserting ``Fiscal Year
1992-2002 Enforcement.'';
(2) in subsection (d), by striking ``estimate of the
amount of change in outlays or receipts, as the case
may be, in each fiscal year through fiscal year 1998''
both places that it appears and inserting ``estimate of
the amount of change in outlays or receipts, as the
case may be, in each fiscal year through fiscal year
2002'' both places; and
(3) in subsection (e), by striking ``for any fiscal
year from 1991 through 1998,'' and inserting ``for any
fiscal year from 1991 through 2002,''.
(b) Section 254(g)(3) of the Balanced Budget and Emergency
Deficit Control Act of 1985 is amended by striking ``1998'' and
inserting ``2002''.
(c) Upon enactment of this Act, the director of the Office
of Management and Budget shall reduce the balances of direct
spending and receipts legislation applicable to each fiscal
year under section 252 of the Balanced Budget and Emergency
Deficit Control Act of 1985 by an amount equal to the net
deficit reduction achieved through the enactment in this Act of
direct spending and receipts legislation for that year.
SEC. 10004. FISCAL DIVIDEND FOR DEFICIT REDUCTION, INVESTMENT, AND TAX
REDUCTION.
Title VI of the Congressional Budget Act is amended by
inserting at the end thereof the following new section:
``SEC. 608. FISCAL DIVIDEND FOR DEFICIT REDUCTION, INVESTMENT, AND TAX
REDUCTION.
``(a) Definitions.--
``(1) Deficit targets.--The term `deficit target'
means--
``(A) with respect to fiscal year 1999,
$131,000,000,000;
``(B) with respect to fiscal year 2000,
$114,000,000,000;
``(C) with respect to fiscal year 2001,
$54,000,000,000; and
``(D) with respect to fiscal year 2002,
$0.''.
``(2) Fiscal dividend.--The term `fiscal dividend'
means, for any fisal year, the amount by which the
deficit target exceeds the actual deficit.
``(b) Use of the Fiscal Dividend in the Congressional
Budget Process--
``(1) Filings--As soon as practicable after the
actual deficit for th prior fiscal year is known, the
Chairs of the Committees on the Budget of the Senate
and House shall file with their respective Houses--
``(A) revised allocations under sections
302(a) and 602(a) of the Congressional Budget
Act of 1974 to the Committees on Appropriations
for the current fiscal year and corresponding
aggregates, increased by one third of the
fiscal dividend for the prior fiscal year; and
``(B) revised revenue aggregates for the
current fiscal year, decreased by one third of
the fiscal dividend for the prior fiscal year.
``(2) Effect of revised allocations and aggregates.--
Revised allocations and aggregates submitted under this
subsection shall be considered for the purposes of the
Congressional Budget Act of 1974 as allocations and
aggregates contained in the most recently adopted
concurrent resolution on the budget.
``(B) Use of the fiscal dividend in the
enforcement of discrettionary spending
limits.--As soon as practicable after the
actual deficit for the prior fiscal year is
known, the Director of the Office of Management
and Budget shall increase the discretionary
spending limits for the current fiscal year by
one third of the fiscal dividend for the prior
fiscal year.
``(C) Use of the fiscal dividend in the
enforcement of pay-as-you-go.--As soon as
practicable after the actual deficit for the
prior fiscal year is known, the Director of the
Office of Management and Budget shall credit
the balances of direct spending and receipts
legislation applicable to the current fiscal
year under section 252 of the Balanced Budget
and Emergency Deficit Control Act of 1985 by
one third of the fiscal dividend for the prior
fiscal year.''
SEC. 10005. EXERCISE OF RULE-MAKING POWERS
The Congress enacts the provisions of this part--
(1) as an exercise of the rule-making power of the
Senate and the House of Representatives, respectively,
and as such these provisions shall be considered as
part of the rules of each House, respectively, or of
that House to which they specifically apply, and such
rules shall supersede other rules only to the extent
that they are inconsistent therewith; and
(2) with full recognition of the constitutional right
of either House to change such rules (so far as
relating to such House) at any time, in the same
manner, and to the same extent as in the case of any
other rule of such House.